Internal rate of return and modified internal rate of return.
Quark Industries has three potential projects, all with an initial cost of $1,700,000. Given the discount rate and the future cash flow of each project, what are the IRRs and MIRRs of the three projects for Quark Industries?
| Cash Flow |
Project M |
Project N |
Project O |
| Year 1 |
$400,000 |
$600,000 |
$900,000 |
| Year 2 |
$400,000 |
$600,000 |
$700,000 |
| Year 3 |
$400,000 |
$600,000 |
$500,000 |
| Year 4 |
$400,000 |
$600,000 |
$300,000 |
| Year 5 |
$400,000 |
$600,000 |
$100,000 |
| Discount rate |
8% |
11% |
17% |
a. What is the IRR for project M?
b. What is the IRR for project N?
c. What is the IRR for project O?