Problem:
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7400 per year for 5 years. Calculate the two projects, NPV, IRRs, MIRR and PI, assuming a cost of capital of 12%.
Which project would be selected, assuming they are mutually exclusive, using each ranking method?
Which should actually be selected?