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    MIRR of the better project

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    You 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 12%. You must make a recommendation, and you must base it on the modified IRR (MIRR). What is the MIRR of the better project.

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    Solution Summary

    The solution explains how to determine the MIRR of the better project