A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: 0 1 2 3 4 Project X -$1,000 $100 $320 $370 $700 Project Y -$1,000 $900 $100 $55 $55 The projects are equally risky, and their WACC is 10.0%. What is the MIRR of the project that maximizes shareholder value? Round your answer to two decimal places. Do not round your intermediate calculations.
Added by Allen A.
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Calculate the present value of the cash flows for each project using the WACC of 10%. For Project X: PV = $5100/(1+0.10)^1 + $5320/(1+0.10)^2 + $100/(1+0.10)^3 = $5100/1.10 + $5320/1.10^2 + $100/1.10^3 = $4636.36 + $4295.87 + $82.64 = $9014.87 For Show more…
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