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Which of the following statements best describes the difference between the IRR method and the MIRR The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The assumes that cash flows are reinvested at a rate of return equal to the cost of capital. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inf cash outflows to calculate the MIRR. The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR m the terminal value of the initial investment to calculate the MIRR.

Which of the following statements best describes the difference between the IRR method and the MIRR The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The assumes that cash flows are reinvested at a rate of return equal to the cost of capital. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inf cash outflows to calculate the MIRR. The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR m the terminal value of the initial investment to calculate the MIRR.

Essentials Of Investments
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
Section: Chapter Questions
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Which of the following statements best describes the difference between the IRR method and the MIRR method? The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the MIRR. The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR method uses the terminal value of the initial investment to calculate the MIRR.
Transcribed Image Text:Which of the following statements best describes the difference between the IRR method and the MIRR method? The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the MIRR. The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR method uses the terminal value of the initial investment to calculate the MIRR.
Blue Llama Mining Company is analyzing a project that requires an initial investment of $450,000. The project's expected cash flows are: Year Year 1 Year 2 Year 3 Year 4 24.30% 25.58% 28.14% 20.46% Cash Flow $275,000 -100,000 450,000 500,000 Blue Llama Mining Company's WACC is 8%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR): If Blue Llama Mining Company's managers select projects based on the MIRR criterion, they should independent project. this Which of the following statements best describes the difference between the IRR method and the MIRR method? The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and JUN
Transcribed Image Text:Blue Llama Mining Company is analyzing a project that requires an initial investment of $450,000. The project's expected cash flows are: Year Year 1 Year 2 Year 3 Year 4 24.30% 25.58% 28.14% 20.46% Cash Flow $275,000 -100,000 450,000 500,000 Blue Llama Mining Company's WACC is 8%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR): If Blue Llama Mining Company's managers select projects based on the MIRR criterion, they should independent project. this Which of the following statements best describes the difference between the IRR method and the MIRR method? The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and JUN
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