Question: This time you will compare the projects using the Modified IRR technique. Assume that the reinvestment rate for both projects is 5%. To get full
This time you will compare the projects using the Modified IRR technique. Assume that the reinvestment rate for both projects is 5%.
To get full credit please do the following:
Define the technique.
Discuss the difference between this method and payback period, discounted payback period, and NPV..
Analyze the numbers in the problem using an excel spreadsheet.
You must use Excel formulas which are on the ribbon in Excel marked Fx to make your calculations whenever possible.
Remember to carry out your answers at least two decimal places.
| Year | Project A | Project B | Project C |
| 2018 | ($3,000,000) | ($3,000,000) | ($3,200,000) |
| 2019 | $0 | $975,000 | $985,000 |
| 2020 | $600,000 | $975,000 | $925,000 |
| 2021 | $900,000 | $975,000 | $1,000,000 |
| 2022 | $3,000,000 | $1,000,000 | $950,000 |
| IRR | 12% | 12% | 8% |
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