12. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessartly generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's tRR. Consider the following situation: Celestial Crane Cosmetics is analyzing a project that requires an initial investment of $3,000,000. The propoct's expected cash flows are: of retum (MIRe) 20.96% 10.15% 14.A2\% 17.62w Celestial Crane Cosmetics's WACC is 7%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR): 20.36% 19.15% 14,42% 1782% If Celestal Crane Cosinetics's manogers select projects based on the Mupr criterion, they should this independent project. Which of tive following statements about the relationship between the IRR and the MrRe is correct? A typical firm's 1RR will be greater than ats Migh, A trpicat firmis thet will be ectat te the Mind. A trpicat firm's the will be less than its Migh