Consider the following two mutually exclusive projects:

Cash Flows

Project Year 0 Year 1 Year 2 Year 3 Year 4 IRR__

X ($1,000) $3,000 $2,000 $500 $600 13.20%

Y ($2,500) $2,000 $1,000 $1,000 $800 12.24%

1. The appropriate discount rate is 12%, calculate the MIRR for Project Y only.
2. Calculate the Equivalent Annual Cash Flow [EAC application] for Project Y.
3. How did you construct the incremental project, between X and Y, and calculate its annual cash flows and IRR.