Homework answers / question archive / There are two mutually exclusive projects with the following cash flows:        Time              0            1             2            3              4          5                    Project A          -$100m    $40m       $70m     $40m     $10m   $10m Project B          -$100m    $10m       $20m     $70m     $40m    $60m The opportunity cost of capital is 10%

There are two mutually exclusive projects with the following cash flows:        Time              0            1             2            3              4          5                    Project A          -$100m    $40m       $70m     $40m     $10m   $10m Project B          -$100m    $10m       $20m     $70m     $40m    $60m The opportunity cost of capital is 10%

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There are two mutually exclusive projects with the following cash flows:

       Time              0            1             2            3              4          5                   

Project A          -$100m    $40m       $70m     $40m     $10m   $10m

Project B          -$100m    $10m       $20m     $70m     $40m    $60m

The opportunity cost of capital is 10%. Calculate the NPV (5 points), IRR (3 points), MIRR (5 points) and payback period (2 points) for both projects. Which project should be selected?

(NPV IRR  MIRR, Payback period

Project A        (37.3,  27.8,  17.2, 1.86 years

Project B        (42.8, 22.16, 18.12, 3 years