4. 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 UL. However, in reality the reinvested cash nows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a mons reasonable assumption other than the project's R Consider the following situation: Cute Camel Woodcraft Company is analyzing a project that requires an initial Investment of $500,000. The project's expected cash flows are: Year Year 11 Year 2 Year 3 Year 4 Cash Flow $375,000 -175,000 475,000 400,000 Cute Camel Woodcraft Company's WACC is 8%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR) O 17.71% 20.83% O 18.75% 23,95% If Cute Camel Woodcraft Company's managers select projects based on the MIR criterion, they should this independent project. Which of the following statements best describes the difference between the IRR method and the MIRR method? The IRR method assumes that cash nows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital