A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following net cash flows:

a. What is each project’s NPV?
b. What is each project’s IRR?
c. What is each project’s MIRR? (Hint: Consider Period 7 as the end of Project B’s life.)
d. From your answers to Parts a, b, and c, which project would be selected? If the WACC was 18%, which project would be selected?
e. Construct NPV profiles for Projects A and B.
f. What is each project’s MIRR at a WACC of18%?
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October 5, 2011

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