Which of the Following Is NOT a Valid Method of Modifying

question 58

Multiple Choice

Which of the following is NOT a valid method of modifying cash flows to produce a MIRR?

• A)Discount all of the negative cash flows to the present and compound all of the positive cash flows to the end of the project.
• B)Discount all of the negative cash flows to time 0 and leave the positive cash flows alone.
• C)Turn multiple negative cash flows into a single negative cash flow by summing all negative cash flows over the project's lifetime.
• D)Leave the initial cash flow alone and compound all of the remaining cash flows to the final period of the project.

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Definitions:

Cheques

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or the person named on it.

Lockbox System

A lockbox system is a service offered by banks to companies for the receipt of payment from customers, under which the payments are directed to a special post office box rather than to the company.

Daily Interest Rate

A method of calculating interest where the rate is applied to the principal on a daily basis.