# Project selection

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?

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#### 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