4 Business executives often prefer to work with Select rate of return, so to overcome some of the IRR's limitations the modified IRR was devised. The MIRR equation is: CON El Car(:)" (-) (1+MK) PVcorts (1+MAUX)" While the TRR's reinvestment rate assumption is the IRR, the MIRR's reinvestment rate assumption is the project's Select V. As a result, the MIRR is generally a better indicator of a project's true Select than IRR. Unlike the IRR, there can select be more than one MIRR, and the MIRR can be compared with the project's select when deciding to accept or reject projects. For elect projects, the NPV, IRR, and MIRR always reach the same accept/reject condusion: so the three criteria are equally good when evaluating elect v projects. It projects are mutually exclusive and they differ in size, conflicts in project acceptance alot varise. In these cases, the Select- v is the best decision method because it selects the project that maximizes firm value. Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all Included in these cash flows. Both projects have 4 year lives, and they have risk characteristics similar to the firm's average project, Bellinger's WACC I5 8%. 2 4 Project A -1.350 600 355 210 260 Project B 1,350 200 290 360 710 What is Project A's MIRR? Do not round intermediate calculations, Round your answer to two decimal places Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects after tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Hellinger's WACC is 8%. 0 1 2 CHA -1.350 -1.350 600 200 210 360 260 710 290 Project A 355 Project B What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places, % What is Project B's MIRR? Do not round intermediate calculations, Round your answer to two decimal places. 96 If the projects were independent, which project(s) would be accepted according to the MIRR method? of the projects were mutually exclusivo, which project(s) would be bacepted according to the MIRR method