Question: You are analyzing two mutually exclusive projects with the following cash flows: a. Estimate the NPV of each project, assuming a cost of capital of

You are analyzing two mutually exclusive projects with the following cash flows:

a. Estimate the NPV of each project, assuming a cost of capital of 10%. Which is the better project?
b. Estimate the IRR for each project. Which is the better project?
c. What reinvestment rate assumptions are made by each of these rules? Can you show the effect on future cash flows of these assumptions?
d. What is the MIRR on each of these projects?

Year $4,000,000 $1,000,000 $1,500,000 $1,700,000 $2,400,000 0 $4,000,000 $2,000,000 $1,500,000 $1,250,000 $1,000,000 4

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