Question: Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: The projects are equally risky, and

Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below:

The projects are equally risky, and their cost of capital is 12 percent. You must make a recommendation, and you must base it on the modified IRR (MIRR). What is the MIRR of the better project?

Year х ($1,000) ($1,000) 100 1,000 300 100 3 400 50 4 700 50

Year ($1,000) ($1,000) 100 1,000 300 100 3 400 50 4 700 50

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1000 1636371 MIRRY 4 Thus since MIRR X MIRRY Project X should be chosen Alterna... View full answer

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