Purchase Solution

Modified IRR (MIRR)

Not what you're looking for?

Ask Custom Question

Your company is considering two mutually exclusive projects,X and Y, whose costs and cash flows are shown below:

Year X Y
0 (1,0000) (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?

Purchase this Solution
Solution Summary

Uses modified IRR (MIRR) to select between two mutually exclusive projects.

Solution Preview

Please see attached file:

Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below:

                Year        X           Y
                 0         (1,0000)    (1,000) -1000
                 1          100         1,000 1000
                 2          300         100 100
                 ...

Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

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.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

View More Free Quizzes
Related BrainMass Solutions

  • The Modified IRR (MIRR) Method

    156605 The Modified IRR (MIRR) Method This is a True/ False question. 1)The modified IRR (MIRR) method has wide appeal to professors, but most business executives prefer the NPV method to either the regular or modified IRR.

  • Calculate project's modified IRR (MIRR)?

    Output: I = 12.866% = MIRR 12.9%. This post gives a detailed solution for calculating project's modified IRR (MIRR).

  • Calculating the project's MIRR

    The firm's management is uncomfortable with the IRR reinvestment assumption and prefers the modified IRR approach. I calculated a cost of capital for the firm of 12 percent. What is the project's MIRR?

  • Valuation Methodologies - NPV, IRR, and MIRR

    It is that rate of interest that makes the sum of all cash flows zero, and is useful to compare one investment to another."3 Hence at IRR, NPV=0. MIRR is Modified internal rate of return. MIRR takes care of cost of reinvestment.

  • Modified IRR(MIRR).

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

  • Non normal cash flows, MIRR; Jones Construction IRR

    Calculate this project's modified internal rate of return (MIRR) 2) XYZ managers select projects based on the MIRR criterion, should the accept the independent project?

  • Decision rules of capital budgeting techniques

    ), and the modified IRR (MIRR) method.

  • Modified IRR

    While the internal rate of return (IRR) assumes the cash flows from a project are reinvested at the IRR, the modified IRR assumes that all cash flows are reinvested at the firm's cost of capital.

  • MIRR of the better project

    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. Please see the attachment.

View More Related Solutions