Question 2 (6 points) Consider the following 2 mutually exclusive projects. The manager doesn't know yet what required rate of return to use. If the IRR(X)=17.54% and IRR(Y) = 16.22%, explain if NPV profiles will cross and at what rate. Calculate MIRR of X and MIRR of Y if the reinvestment rate is 10%. Explain on your exam paper which project should be accepted and why. Year 0 1 2 3 4 Project X ($10,000) 5,500 4,500 2,500 1000 Project Y ($10,000) 1,000 2,000 6,000 7,000 Crossover rate is 14.37%; Accept Y and reject X if R is lower than 14.37%; MIRR(X)=13.36%; MIRR(Y)=14.77% Crossover rate is 12.37%, Accept Y and reject X if Ris lower than 12.37%; MIRR(X)=11.4% and MIRR(Y)=12.66% Crossover rate is 14.37%, Accept X and reject Y if R is lower than 14.37%, MIRR(X)=MIRR(Y)=10% No conflict between IRR and NPV rule accept the project with the higher NPV We don't know because we don't know the required rate of return