Which of the Following Is NOT a Valid Method of Modifying

question 66

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

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until the maturity date, considering all interest payments and the principal.

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns, often involving equity ownership, debt purchases, or other financial instruments.

Called Bonds

Bonds that have been redeemed before their maturity date by the issuer, usually at a predefined call price.

Outstanding Bond Issues

Bonds that have been issued and are currently in circulation, yet to be repaid by the issuer.