Which of the Following Is a Reason the Modified Internal

question 66

Multiple Choice

Which of the following is a reason the modified internal rate of return (MIRR) measure is a better indicator of a project's true profitability than the internal rate of return (IRR) measure?

• A)The modified internal rate of return (MIRR) assumes that the project's cash flows are reinvested at its internal rate of return (IRR), which is generally correct.
• B)The modified internal rate of return (MIRR) assumes that the terminal value of the project is the profit it generates, which is generally correct.
• C)The modified internal rate of return (MIRR) assumes that the project's cash flows are reinvested at the firm's required rate of return, which is a better assumption than the IRR assumption that the cash flows are reinvested at its IRR.
• D)The modified internal rate of return (MIRR) assumes that the future value of the project's cash outflows is equal to its terminal value, which is generally correct.
• E)The modified internal rate of return (MIRR) assumes that projects with multiple cash outflows should be evaluated with high required rates of return, which is generally correct.

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Definitions:

Isotope

Atoms of the same element that have the same number of protons but different numbers of neutrons, resulting in different mass numbers.

Magnesium

A chemical element with the symbol Mg and atomic number 12, known for its low density and high strength, used in alloys, fireworks, and medical applications.

Atomic Mass

The mass of an atom, typically measured in atomic mass units (amu) or daltons, representing the total mass of protons, neutrons, and electrons in the atom.

Boron

A chemical element with symbol B and atomic number 5, used in making glass, detergents, and semiconductors.