Question

MIRR A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: = Project X Project Y -$1,000 $110 -$1,000 $1,100 $280 $110 $400 $55 $750 $50 The projects are equally risky, and their WACC is 8%. What is the MIRR of the project that maximizes shareholder value? Round your answer to two decimal places. Do not round your intermediate calculations. %

Answer 1

A. C Е F cash flows discounted cash flows 1 Project X -$1,000 Project Y -$1,000 Project X -$1,000.00 Project Y 2 YEAR pv @ 8% -$1,000.00 $1,018.52 3 0 1.0000 $110 $1,100 $101.85 1 0.9259 $280 $110 $240.05 $94.31 5 2 0.8573 $400 $55 $317.53 $43.66 6 3 0.7938 $750 $50 $551.27 $36.75 7 4 0.7350 $210.71 $193.24 13.29% 12.88% MIRR NPV MIRR(B3:B7,8%,8%) MIRR(C3:C7,8%,8%) 10 11 MIRR of the project that maximises shareholder value 13.29% 12 13 st