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    MIRR of the better project

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    Problem 11-11. MIRR and NPV Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below:
    Year X Y
    0 -$1,000 -$1,000
    1 100 1,000
    2 300 100
    3 400 50
    4 700 50
    The projects are equally risky, and their cost of capital is 15 percent. You must make a recommendation, and you must base it on the modified IRR (MIRR). What is the MIRR of the better project? Round the answer to the nearest hundredth.

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    Solution Summary

    The solution explains how to calculate the MIRR of the better project.