Question

Quark Industries has three potential​ projects, all with an initial cost of ​$1,800,000. Given the discount rate and the future cash flow of each​ project, what are the IRRs and MIRRs of the three projects for Quark​ Industries?

Cash Flow	Project M		Project N		Project O
Year 1	​ $500,000		​$600,000		​$1,000,000
Year 2	​$500,000		​$600,000		​$800,000
Year 3	​$500,000		​$600,000		​$600,000
Year 4	​$500,000		​$600,000		​$400,000
Year 5	​$500,000		​$600,000		​$200,000
Discount rate	7%		11​%		18​%

a) What is the IRR for project M?

b) What is the MIRR for project M?

c) What is the IRR for project N?

d) What is the IRR for project O?

e) What is the MIRR for project O?

Answer 1

Formula used are shown below;