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Your company is considering two mutually exclusive projects, X and Y whose costs and cash flows are shown below. Assume that the projects are
Your company is considering two mutually exclusive projects, X and Y whose costs and cash flows are shown below. Assume that the projects are equally risky, and their cost of capital is 13%. Year Project X Project Y 0 $(5,500) $(5,500) 1 1,000 4,500 2 1,500 1,500 3 4 2,000 1,000 4,500 800 What are MIRRs of Project X and Project Y? Which project you will accept based on MIRR project selection criterion, if projects are mutually exclusive?
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