Question: 1. IRR AND NPV A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4
1. IRR AND NPV
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:
| 0 | 1 | 2 | 3 | 4 |
| Project S | -$1,000 | $903.12 | $240 | $5 | $10 |
| Project L | -$1,000 | $5 | $240 | $400 | $831.49 |
The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.
2. 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 | $100 | $320 | $370 | $700 |
| Project Y | -$1,000 | $1,100 | $100 | $50 | $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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