Question

**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.

Answer #1

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

X:

Present value of inflows=90/1.11+320/1.11^2+370/1.11^3+700/1.11^4

=$1072.45

NPV=Present value of inflows-Present value of outflows

=$1072.45-$1000

=$72.45

Y:

Present value of inflows=1100/1.11+100/1.11^2+55/1.11^3+50/1.11^4

=$1145.31

NPV=Present value of inflows-Present value of outflows

=$1145.31-$1000

=$145.31

Hence Y is a better project having higher NPV.

We use the formula:

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

where

A=future value

P=present value

r=rate of interest

n=time period.

A=1100(1.11)^3+100(1.11)^2+55(1.11)+50

=$1738.6541

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

=[1738.6541/$1000]^(1/4)-1

which is equal to

=**14.83%(Approx).**

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
$400
$700
Project Y
-$1,000
$1,100
$90
$45
$45
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. _____%

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
$110 $300 $370 $700 Project Y -$1,000 $900 $90 $50 $45 The projects
are equally risky, and their WACC is 13%. 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
$90
$320
$400
$700
Project Y
-$1,000
$1,100
$110
$45
$55
The projects are equally risky, and their WACC is 10%. 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
$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 $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.

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
$300
$400
$650
Project Y
-$1,000
$1,000
$100
$45
$55
The projects are equally risky, and their WACC is 10.0%. 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
$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
$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.

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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
$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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