Your Company Is Considering Two Mutually Exclusive Projects, X and Y

question 20

Multiple Choice

Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: The projects are equally risky, and the firm's required rate of return is 12 percent.You must make a recommendation, and you must base it on the modified IRR.What is the MIRR of the better project?

• A) 12.00%
• B) 11.46%
• C) 13.59%
• D) 12.89%
• E) 15.73%

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Definitions:

Not-for-profit Organization

A type of organization that does not distribute its excess profits to owners or shareholders but instead uses them to help achieve its goals.

Capital Fund

A fund created for the purpose of undertaking capital projects or investing in long-term assets, funded by capital expenditures or external financing sources.

General Fund

The primary operating fund of a government, covering general operations and services not accounted for in special-purpose funds.

Direct Increase

A rise in the value or quantity of something without intervening steps or intermediaries.