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  3. 9. modified internal rate of return (mirr) the irr

9. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows...

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Accounting

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9. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Cold Goose Metal Works Inc: is analyzing a project that requires an initial investment of $3,225,000. The project's expected cash flows are: Cold Goose Metal Works Incis WACC is 8%, and the project has the same risk as the firm's average project. Calculace this project's modified internal rate of return (MIRR). 19.16% 15.17% 10.94% 12.78% If Cold Goose Metal Works Inci's managers select projects based on the MIRR criterion, they should this independent project. Which of the following statements about the relationship between the IRR and the MIRR is correct? A typical firm's 1RR will be equal to its MIRR. A typical firm's IRR Wil be less than its MtrR. A typical Firm's IRR will be greater than its MIRR

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