Question

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. Do not round intermediate calculations. Round your answers to two decimal places.

Project X: %

Project Y: %

Which project has the higher MIRR?

-Select-Project XProject Y has the higher MIRR.

Answer 1

A B C D 1 Year o HMON ($5,000 1,000 1,500 2 ,000 4 ,000 $5,000) 4,500 1,500 1,000 500 3 4 8 Cost of Capital 9 MIRR 11% 17.21% 17.75% 10 11

А 1 Year X Y -5000 4500 3 1 4 2 5 3 -5000 1000 1500 2000 1500 1000 4000 500 8 Cost of Capital 9 MIRR 10 0.11 =MIRR(B2:B6,$B$8,$B$8) =MIRR(C2:06, $B$8,$B$8)

Project Y has higher MIRR