- Capital Budgeting
- Capital Budgeting Ratios
- Modified Internal Rate of Return (MIRR)
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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The solution explains how to determine the MIRR of the better project