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  1. business
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  3. a). you have been assigned the task of evaluating

a). You have been assigned the task of evaluating two mutually exclusive projects with the...

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Accounting

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a). You have been assigned the task of evaluating two mutually exclusive projects with the following cash flows: (Marks: 10 ) Requirements: The projects are equally risky, and their cost of capital is 12%. You must make a recommendation, and you must base it on the modified IRR. What is the MIRR of the better project? (Show your steps) b). Project J has a cost of $22,000 and is expected to produce benefits (cash flows) of $7,000 per year for 4 years. Project K costs $70,000 and is expected to produce cash flows of $20,000 per year for 4 years, however in year 3 , each project has a cash outflow of $5,000 for Project J and $7,000 for Project K. Calculate the two projects' NPVs, IRRs, MIRRs and PIs assuming a cost of capital of 10%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which project should actually be selected? (Marks: 20)

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