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:

Firm's Cash Cycle

The length of time it takes a company to convert its investments in inventory and other resources into cash flows from sales.

Cash Budgeting

The process of forecasting future financial positions based on anticipated cash receipts and disbursements.

Taxes

Taxes are compulsory financial charges imposed by a government on individuals and organizations to fund public expenditures.