Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years.
Calculate the two projects' NPV's, IRR's, MIRR's, and PI's, assuming a cost of capital of 12%.
Which project would be selected, assuming they are mutually exclusive, using each ranking method?
Which should actually be selected?© BrainMass Inc. brainmass.com June 4, 2020, 12:21 am ad1c9bdddf
Please see the attachment for calculations
NPV IRR MIRR PI
Project S 814.33 15.24% 13.70% 1.08
The solution explains project selection using NPV's, IRR's, MIRR's, and PI's