FM11 11 - MIRR S> MIRR L and PI S> PI L The scale...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Project L Inputs 5 12 0 7400 I PV PMT FV N Output = -47,011.07 PV costs L = $25,000. FV inflows L = $47,011.07. Inputs 5 -25000 0 47011.07 I PV PMT FV N Output = 13.46 MIRR L = 13.46%. PI S = 000 , 10 $ 33 . 814 , 10 $ = 1.081. PI L = 000 , 25 $ 34 . 675 , 26 $ = 1.067. Thus, NPV L > NPV S , IRR S > IRR L
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: , MIRR S > MIRR L , and PI S > PI L . The scale difference between Projects S and L result in the IRR, MIRR, and PI favoring S over L. However, NPV favors Project L, and hence L should be chosen. Answers and Solutions: 11 - 11...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern