12. Modified internal rate of return (MIRR) The IAR evaluation method assumes that cash flows from the project are relivested at the same rate equal to the IRR. However, in feality the reinvested cash fiows may not necessarily generate a return equal to the InR. Thus, the modified tRa approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Blue Ularma Mining Company is analyring a project that requires an initial investment of $3,000,000. The project's expected eash flows are: Bhe Liama Mining Company's WACC is 9%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MrRR) ? Bive Lama Mining Company's. WACC is 9%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of requm (MIRQ): If Blue Lama Mining Company's managers select projects based on the MiRR criterion, they should this independent project. Which of the following statements about the relationship between the IRR and the MIRR is correct? A typical firm's IRR will be equal to its MIRR. A typical firm's 1RR will be less than its MIRR. A typical firm's 1RR. will be greater than its MIRR