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%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Which project has the higher MIRR?

Year $5,000 1,000 1,500 2,000 4,000 -$5,000 4,500 1,500 1,000 500

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