Question

Two new annuity-oriented projects are considered: Project A: €1 m cost, 5-year CFs of €300k with MIRR 14%. Project B: €1 m cost, front-loaded CFs of €400k then lower, MIRR 13%. WACC = 10%, both positive NPVs, mutually exclusive. Which project should be chosen and why?

A A – higher MIRR
B B – front-loaded cash flows reduce risk
C A – MIRR better for reinvestment assumptions
D B – earlier paybacks matter
E Cannot decide without NPV
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