1: MIRR Project 1 = 16.94%
Project 2 = 13.4%
Without adjustment | ||
Year | Project 1 CF | Project 2 CF |
0 | -1800000 | -1800000 |
1 | 650000 | 510000 |
2 | 650000 | 510000 |
3 | 650000 | 510000 |
4 | 650000 | 510000 |
5 | 650000 | 510000 |
6 | 510000 | |
MIRR | 16.94% | 13.40% |
Project 1 will be selected since it has higher MIRR
2:
Project 1 | Project 2 | |
MIRR | 11.07% | 9.93% |
With adjustment | ||
Year | Project 1 CF | Project 2 CF |
0 | -1800000 | -1800000 |
1 | 650000 | 510000 |
2 | 650000 | 510000 |
3 | 650000 | 510000 |
4 | 650000 | 510000 |
5 | -1150000 | 510000 |
6 | 650000 | -1290000 |
7 | 650000 | 510000 |
8 | 650000 | 510000 |
9 | 650000 | 510000 |
10 | -1150000 | 510000 |
11 | 650000 | 510000 |
12 | 650000 | -1290000 |
13 | 650000 | 510000 |
14 | 650000 | 510000 |
15 | -1150000 | 510000 |
16 | 650000 | 510000 |
17 | 650000 | 510000 |
18 | 650000 | -1290000 |
19 | 650000 | 510000 |
20 | -1150000 | 510000 |
21 | 650000 | 510000 |
22 | 650000 | 510000 |
23 | 650000 | 510000 |
24 | 650000 | -1290000 |
25 | -1150000 | 510000 |
26 | 650000 | 510000 |
27 | 650000 | 510000 |
28 | 650000 | 510000 |
29 | 650000 | 510000 |
30 | 650000 | 510000 |
Still Project 1 is selected since it has higher MIRR. The decision is the same.
WORKINGS
MIRR unequal lives. Singing Fish Fine Foods has $1,800,000 for capital investments this year and is...
NPV unequal lives: Singing Fish Fine Foods has $1,880,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is $560,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $500,000 for the next six years. If the appropriate discount...
Score: 0 of 1 pt 7 of 9 (4 complete) HW Score: 44.44%, 4 of 9 pts pg-16 (similar to) Quesation Help MIRR unequal Itves. Singing Fish Fine Foods has $1,880,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. The estimated after-tax cash flow of this project is 5610,000 per year for the next five years. Project 2 is updating the stores...