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 $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.

Answer #1

X:

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

=100/1.11+280/1.11^2+430/1.11^3+750/1.11^4

=1125.80

NPV=Present value of inflows-Present value of outflows

=1125.80-1000

=$125.80(Approx)

Y:

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

=1000/1.11+100/1.11^2+55/1.11^3+45/1.11^4

=1051.92

NPV=Present value of inflows-Present value of outflows

=1051.92-1000

=$51.92(Approx)

Hence X is better having higher NPV.

For 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*(1.11)^3+280*(1.11)^2+430*(1.11)+750

=1709.0511

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

=[1709.0511/1000]^(1/4)-1

**=14.34%(Approx)**

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with the following cash flows:
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1
2
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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
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with the following cash flows
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Project X
-$1,000
$100
$280
$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
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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
$280
$400
$750
Project Y
-$1,000
$900
$110
$45
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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.
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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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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 $300 $430 $700
Project Y: -$1,000 $1,100 $100 $55 $55
The projects are equally risky, and their WACC is 13.0%. What is
the MIRR of the project that maximizes shareholder value? 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.
%____

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
$300
$430
$700
Project Y
-$1,000
$1,100
$100
$45
$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.

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
$370
$650
Project Y
-$1,000
$1,100
$110
$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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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.

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.
= %

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