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A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: 0 1 2 3 4 Project...

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Finance

A firm is considering two mutually exclusive projects, X and Y,with the following cash flows:

01234
Project X-$1,000$110$280$370$650
Project Y-$1,000$1,100$100$55$45

The projects are equally risky, and their WACC is 8%. What isthe MIRR of the project that maximizes shareholder value? Roundyour answer to two decimal places. Do not round your intermediatecalculations.

%

Answer & Explanation Solved by verified expert
3.6 Ratings (496 Votes)
Project X Discount rate 8000 Year 0 1 2 3 4 Cash flow stream 1000 110 280 370 650 Discounting factor 1000 1080 1166 1260 1360 Discounted cash flows project 1000000 101852 240055 293718 477769 NPV Sum of discounted cash flows NPV Project X 11339 Where Discounting factor 1 discount rateCorresponding period in    See Answer
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Transcribed Image Text

A firm is considering two mutually exclusive projects, X and Y,with the following cash flows:01234Project X-$1,000$110$280$370$650Project Y-$1,000$1,100$100$55$45The projects are equally risky, and their WACC is 8%. What isthe MIRR of the project that maximizes shareholder value? Roundyour answer to two decimal places. Do not round your intermediatecalculations.%

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