Big Company is evaluating two projects, Project A and Project B. Both projects are of equal risk. Big Company has a WACC of 10%. The expected Free Cash Flows of the projects are as follows:

Period	Annual Cash Flows Project “A”		Annual Cash Flows Project “B”
0	($25,000)		($25,000)
1	5,000		20,000
two	10,000		10,000
3	15,000		8,000
4	20,000		6,000

Compute the Modified Internal Rate of Return (MIRR) for Project “A”.

The Modified Internal Rate of Return of Project “B” is 20.96%. If Projects “A” and “B” are independent, considering only the MIRR method, which project(s) should Big Company proceed with? Explain your answer.

Answer rating: 100% (QA)

Solution MIRR Project A 2193 The MIRR of pr... View the full answer