Question: Suppose a firm is considering two mutually exclusive equally risky projects with WACC = 12% and the following cash flows: 0 1 2 3

Suppose a firm is considering two mutually exclusive equally risky projects with WACC = 12% and the following cash flows: 0 1 2 3

Suppose a firm is considering two mutually exclusive equally risky projects with WACC = 12% and the following cash flows: 0 1 2 3 4 Project X -$1,000 Project Y -$1,000 $700 $650 $550 $400 $950 $600 $500 $350 How can you calculate the MIRR for the project that maximizes shareholder value? Assuming that your professional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should enter to compute the MIRR for Project X. CFo CF4 CF3 CF2 CF1 Input Keystroke Arrow down Arrow down Arrow down Arrow down Arrow down IRR I MIRR Output Suppose that your calculator does not have the ability to compute the MIRR. Here are the steps you need to take to calculate the MIRR for Project Y. 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CFo CF1 CF2 CF3 CF4 Input Keystroke Output Arrow down Arrow down Arrow down Arrow down Arrow down I/Y NPV

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