Which of the Following Is Most Correct? the Modified IRR

question 17

Multiple Choice

Which of the following is most correct? The modified IRR (MIRR) method:

• A)Always leads to the same ranking decision as NPV for independent projects.
• B)Overcomes the problem of multiple rates of return.
• C)Compounds cash flows at the required rate of return.
• D)Overcomes the problem of cash flow timing and the problem of project size that leads to criticism of the regular IRR method.
• E)Answers b and c are both correct.

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Definitions:

Adam Smith

A Scottish economist, philosopher, and author who is considered the father of modern economics, known for his theories on free markets.

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A British economist whose theories on the effects of government spending and total demand influenced modern macroeconomics and government fiscal policy.

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A 19th-century philosopher, political economist, and revolutionary, best known for his critical analysis of capitalism and his advocacy for communism.

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