# Calculating NPV, IRR and MIRR,PI of given projects

Not what you're looking for?

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7400 per year for 5 years. Calculate the two projects, NPV, IRRs, MIRR and PI, 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?

##### Purchase this Solution

##### Solution Summary

Solution describes the steps to calculate NPV, IRR, MIRR and PI of given projects. It also determines the better project.

##### Solution Preview

Please refer attached file for better clarity of formulas in MS Excel.

Solution:

1. Project's NPV?

Project S Project L

Year End(n) Cash flow (C) PV=C/(1+12%)^n Year End(n) Cash flow (C) PV=C/(1+12%)^n

0 -10000 -10000.00 0 -25000 -25000.00

1 3000 2678.57 1 7400 6607.14

2 3000 2391.58 2 7400 5899.23

3 3000 2135.34 3 7400 5267.17

4 3000 1906.55 4 7400 4702.83

5 ...

###### Education

- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India

###### Recent Feedback

- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

##### Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

##### Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

##### Basics of corporate finance

These questions will test you on your knowledge of finance.

##### Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.