Question: Firm ABC is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. WACC:

Firm ABC is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable.

WACC:

8.75%

Year

0

1

2

3

4

CFS

$1,100

375

375

375

375

CFL

$2,200

725

725

725

725

Q1. NPV of project S and project L

Q2. IRR of project S and project L

Q3. MIRR of project S and project L

Q4. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone?

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