Question

< Back to Assignment Attempts: 0 Keep the Highest: 0/1 9. Problem 11.13 Click here to read the eBook: Modified Internal Rate of Retum (MIRR) Problem Walk-Through MIRR A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: Project X Project Y $1,000 $1,000 $100 $900 $300 $90 $400 $50 $650 $50 The projects are equally risky, and their WACC IS 8%. What is the MIRR of the project that maximizes shareholder value7 Round your answer to two decimal places. D. intermediate calculations. Continue without saving arch

Answer 1

First find The NPV of both the projects discount each cash flow to 0 and then find sum

Project X total discounted cash flow is $134.38

Project Y total discounted cash flow is -$12.10 If the projects are mutually exclusive then the project of higher NPV should be accepted ,so consider project X

now,we know that project x is better project then Find MIRR ? find the factor (1+WACC)

project X total future value(upto 4 periods 0-3) is $2945.61

and then find the cash flow editor and solving for MIRR gives 19.96133%