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Determining the Best Mutually Exclusive Project

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Given the cash flows for projects S and L, which are MUTUALLY EXCLUSIVE projects, compute the capital budgeting metrics and based on your computations then recommend the best project. Cost of capital for both projects is 10%.

Project S Project L
0 -$2,000 -$1,650
1 $1,700 $600
2 -$400 $900
3 $600 -$175
4 $450 $800

NPV
IRR
MIRR
PI.

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Solution Summary

This solution illustrates how to use the Excel functions to find the net present value, internal rate of return, modified internal rate of return, and profitability index of each of two mutually-exclusive projects, and how to determine which to accept.

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