The Modified IRR method is   a. Exactly the same as the IRR.   b. A better measure than the NPV.   c. The discount rate that causes the present value of a project's terminal value to equal the present value of the costs.  The terminal value is found by compounding the cash inflows at the Weighted Average Cost of Capital.  Cash flows are reinvested at the Weighted Average Cost of Capital.   d. A less realistic measure than the standard IRR.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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25...The Modified IRR method is

  a.

Exactly the same as the IRR.

  b.

A better measure than the NPV.

  c.

The discount rate that causes the present value of a project's terminal value to equal the present value of the costs.  The terminal value is found by compounding the cash inflows at the Weighted Average Cost of Capital.  Cash flows are reinvested at the Weighted Average Cost of Capital.

  d.

A less realistic measure than the standard IRR.

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