FM11 12 - 11-11 Project X 0 12 |-1,000 1 2 3 4 | | | | 100...

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11-11 Project X: 0 1 2 3 4 | | | | | 12% -1,000 100 300 400 700.00 448.00 376.32 140.49 1,664.81 1,000 13.59% = MIRR X` Answers and Solutions: 11 - 12 $1,000 = $1,664.81/(1 + MIRR X ) 4 . Project Y: 0 1 2 3 4 | | | | | - 1,000 1,000 100 50 50.00 56.00 125.44 1,404.93 1,636.37 1,000 13.10% = MIRR Y 12% $1,000 = $1,636.37/(1 + MIRR Y ) 4 . Thus, since MIRR X > MIRR Y , Project X should be chosen. Alternative step: You could calculate NPVs, see that Project X has the higher NPV, and just calculate MIRR X . NPV X = $58.02 and NPV Y = $39.94. 11-12 a. Purchase price $ 900,000 Installation 165,000 Initial outlay $1,065,000
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