The MIRR Adjusts the Conventional IRR Figure to Incorporate an Assumed

question 107

Essay

The MIRR adjusts the conventional IRR figure to incorporate an assumed reinvestment rate on interim cash inflows generated by an investment project.Proponents of the MIRR model maintain that the conventional IRR method implicitly assumes a reinvestment rate equal to the project's IRR,which (they maintain)is many times overly optimistic.Therefore,the MIRR provides an appropriate adjustment to account for an assumed (usually lower)rate of return on interim cash inflows.This can be demonstrated by the two calculations above: at an assumed

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Definitions:

Compounds

Substances formed from two or more elements chemically bonded together in fixed proportions.

Distinction

A differentiation between two or more substances or concepts based on their characteristics or properties.

Proton Spin Decoupled

A nuclear magnetic resonance (NMR) spectroscopy technique that simplifies complex spectra by removing interactions between proton spins, aiding in structure determination.

Peaks

Points in a dataset or graph representing maximum values or points of interest, often used in analysis.