Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below:

Year X Y

0 -$5,000 -$5,000

1 1,000 4,500

2 1,500 1,500

3 2,000 1,000

4 4,000 500

The projects are equally risky, and their cost of capital is 11%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs.

Project X:

%

Project Y:

%

Which project has the higher MIRR?

Project X/ Project Y has the higher MIRR.