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A firm is evaluating two projects. Project A requires an initial investment of $100,000 then returns $12,000 in year one, $25,000 in year two, $42,110 in year three and $50,000 in year four. Project B costs $100,000 initially also but returns $73,670 in year one and $39,960 in year two. The cost of capital is 8%.

What are the projects’ modified internal rates of return? If the projects are mutually exclusive, what is your accept/reject decision?

(Please show work! and if there is any way to figure out MIRR on the BA II Plus calculator)

Financial Management, Finance

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