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When Evaluating Mutually Exclusive Projects, the Modified IRR (MIRR) Always

question 10

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When evaluating mutually exclusive projects, the modified IRR (MIRR) always leads to the same capital budgeting decisions as the NPV method, regardless of the relative lives or sizes of the projects being evaluated.


Definitions:

Nondisclosure Agreement

A legal contract between parties to keep certain shared information confidential.

Contractual Capacity

This term refers to the ability of a party to legally enter into a contract, often requiring them to be of a certain age and have a sound mind.

Objective Impossibility

Objective impossibility occurs when it is not feasible to perform an act or fulfill a contract due to external factors, rendering the act or contract physically or legally impossible to complete.

Commercial Impracticability

A doctrine in contract law allowing parties to be discharged from their obligations when unforeseen events greatly increase the difficulty of performance.

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