Question

A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:

0 | 1 | 2 | 3 | 4 |

Project X |
-$1,000 | $100 | $320 | $430 | $650 |

Project Y |
-$1,000 | $1,000 | $100 | $50 | $50 |

The projects are equally risky, and their WACC is 12%. 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

X:

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=100/1.12+320/1.12^2+430/1.12^3+650/1.12^4

=1063.54

NPV=Present value of inflows-Present value of outflows

=1063.54-1000

=$63.54(Approx)

Y:

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=1000/1.12+100/1.12^2+50/1.12^3+50/1.12^4

=1039.94

NPV=Present value of inflows-Present value of outflows

=1039.94-1000

=$39.94(Approx)

Hence X is better having higher NPV.

X:

We use the formula:

A=P(1+r/100)^n

where

A=future value

P=present value

r=rate of interest

n=time period.

Future value of inflows=100*(1.12)^3+320*(1.12)^2+430*(1.12)+650

=$1673.5008

MIRR=[Future value of inflows/Present value of outflows]^(1/time period)-1

=[1673.5008/1000]^(1/4)-1

**=13.74%(Approx)**

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$430
$650
Project Y
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The projects are equally risky, and their WACC is 8%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
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with the following cash flows:
0
1
2
3
4
Project X
$-1,000
$110
$300
$430
$650
Project Y
$-1,000
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The projects are equally risky, and their WACC is 11%. What is
the MIRR of the project that maximizes shareholder value? Round
your answer to two decimal places. Do not round your intermediate
calculations.

A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
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Project X
-$1,000
$100
$320
$370
$650
Project Y
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The projects are equally risky, and their WACC is 9%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places.
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A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$100
$300
$430
$750
Project Y
-$1,000
$1,100
$100
$50
$45
The projects are equally risky, and their WACC is 10%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places.
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with the following cash flows:
0 1 2 3 4
Project X -$1,000 $100 $280 $430 $750
Project Y -$1,000 $1,000 $100 $55 $45
The projects are equally risky, and their WACC is 11%. What is
the MIRR of the project that maximizes shareholder value? Round
your answer to two decimal places. Do not round your intermediate
calculations.

A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$100
$280
$430
$700
Project Y
-$1,000
$1,000
$90
$45
$55
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.

A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$100
$320
$400
$700
Project Y
-$1,000
$1,000
$90
$45
$45
The projects are equally risky, and their WACC is 9%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places.
= %

A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$110
$300
$370
$650
Project Y
-$1,000
$1,000
$100
$55
$45
The projects are equally risky, and their WACC is 9%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places.
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MIRR
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$90
$320
$370
$700
Project Y
-$1,000
$1,100
$100
$55
$50
The projects are equally risky, and their WACC is 11%. What is
the MIRR of the project that maximizes shareholder value? Round
your answer to two decimal places. Do not round your intermediate
calculations.

A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$100
$320
$400
$750
Project Y
-$1,000
$1,100
$100
$50
$50
The
projects are equally risky, and their WACC is 11.0%. What is the
MIRR of the project that maximizes shareholder value? Round your
answer to two decimal places.

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