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    Project selection

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    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
    https://brainmass.com/business/capital-budgeting/project-selection-333721

    Solution Preview

    Please see the attachment for calculations
    NPV IRR MIRR PI
    Project S 814.33 15.24% 13.70% 1.08
    Project ...

    Solution Summary

    The solution explains project selection using NPV's, IRR's, MIRR's, and PI's

    $2.19

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