Question

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%.

	0		1		2		3		4
Project A	-1,300		700		380		200		250
Project B	-1,300		300		315		350		700

What is Project A's MIRR? Round your answer to two decimal places. Do not round your intermediate calculations.
_____%

What is Project B's MIRR? Round your answer to two decimal places. Do not round your intermediate calculations.
_____%

If the projects were independent, which project(s) would be accepted according to the MIRR method?
Neither or Project A or Project B or Both projects A and B

If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method?
Neither or Project A or Project B or Both projects A and B

Answer 1