Capital Budgeting Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 13% to evaluate projects such as these. TimeProject A Cash FlowsProject B Cash Flows0-$46,800-$63,6001-21,60020,400243,20020,400343,20020,400443,20020,4005-28,80020,400 Calculate the IRR and MIRR of projects A & B. Assume a reinvestment rate of 13% for the calculation of MIRR.

The given data is - Year 0 1 2 3 4 5 Cashflow -46800 -21600 43200 43200 43200 -28800 To…

Answered: Assume you are evaluating two mutually…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 1Q

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Capital Budgeting

Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 13% to evaluate projects such as these.

Time	Project A Cash Flows	Project B Cash Flows
0	-$46,800	-$63,600
1	-21,600	20,400
2	43,200	20,400
3	43,200	20,400
4	43,200	20,400
5	-28,800	20,400

Calculate the IRR and MIRR of projects A & B. Assume a reinvestment rate of 13% for the calculation of MIRR.

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