Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A

Question

Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 in year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The modified internal rate of return for Project A is ________. Answer 19.43% 14.98% 14.19% 16.49% Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 in year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The modified internal rate of return for Project A is ________. Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 in year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The modified internal rate of return for Project A is ________. 19.43% 14.98% 14.19% 16.49% 19.43% 14.98% 14.19% 16.49%

Explanation / Answer

Project A =MIRR(CFs,Fin Rate, Reinvest Rate)

so MIRRa = MIRR(-75000,48000,45000,10%,10%) = 14.19%

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