Which of the following is a reason the modified internal rate of return (MIRR) measure is a better indicator of a project's true profitability than the internal rate of return (IRR) measure?
A. The modified internal rate of return (MIRR) assumes that the project's cash flows are reinvested at its internal rate of return (IRR), which is generally correct.
B. The modified internal rate of return (MIRR) assumes that the terminal value of the project is the profit it generates, which is generally correct.
C. The modified internal rate of return (MIRR) assumes that the project's cash flows are reinvested at the firm's required rate of return, which is a better assumption than the IRR assumption that the cash flows are reinvested at its IRR.
D. The modified internal rate of return (MIRR) assumes that the future value of the project's cash outflows is equal to its terminal value, which is generally correct.
E. The modified internal rate of return (MIRR) assumes that projects with multiple cash outflows should be evaluated with high required rates of return, which is generally correct.
Answer: C
You might also like to view...
Which of these would not be a typical question asked during a structured interview?
a. Have you ever found it necessary to shout at a guest? b. What can you tell us about yourself? c. Are you willing to work overtime if we get extra busy? d. Can you use Microsoft Excel?
In advertising, puffery refers to ________
A) broadcasting a straightforward promotional message B) including innocent exaggeration for effect C) creating emotional appeals for a brand D) creating subliminal appeals for a brand E) providing value-added promotions
Three years ago, Michelle bought a custom-made bookcase to fit in the corner of her apartment. She paid $1,000 for it. To replace it today would cost $1,500; however, if she had to sell it, she believes she could get only $700
The appropriate balance sheet amount for the bookcase is A) $1,000. B) $1,500. C) $ 700. D) $1,200.
A disadvantage of licensing as a means of acquiring new technology is that
A. it is the most time-consuming way to develop new technology. B. it is less economical than internal development. C. it involves high monitoring costs. D. the firm does not control or own the unique technology. E. the firm will need to acquire internal development capabilities.