Problem:
Consider the following two mutually exclusive projects, X and Y, and their cash flows information, Project Year 0 Year 1 Year 2 Year 3 Year 4 X ($1,400) $350 $750 $650 $650 Y ($1,000) $300 $400 $500 $600 (a) Assume that the discount rate is 12%, compute the payback period, the IRR, NPV and PI of project X. (b) Use the McKinney's approach to compute the Modified IRR (MIRR) for project X. (c) Apply the incremental IRR analysis to compute the crossover rate for projects X and Y, and select between these two mutually exclusive projects.
Explain comprehensively and provide step by step solution.