Which of the Following Characteristics Is Not True of the Modified

question 126

Multiple Choice

Which of the following characteristics is not true of the modified internal rate of return (MIRR) ?

• A) Unlike IRR, MIRR does not consider the time value of money.
• B) It focuses on after-tax cash flows, rather than accounting income amounts.
• C) It cannot be used reliably to choose between mutually exclusive projects.
• D) Its use may not lead to an optimum capital budget.
• E) It is complex to compute, if done manually.

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Definitions:

Income Tax Payable

The amount of income tax that a company or individual owes to the government, but has not yet paid.

Business Operations

Encompasses the day-to-day activities that a business engages in to run smoothly and efficiently, aiming at generating revenue.

Deductible Temporary Difference

Differences between the carrying amount of an asset or liability in the balance sheet and its tax base that will result in amounts deductible in future periods when recovering the carrying amount.

Deferred Tax Asset

An asset on the balance sheet that may be used to reduce future tax liability generated due to timing or temporary differences between accounting income and taxable income.