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 IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumptio other than the project's IRR. Consider the following situation: Green Caterpillar Garden Supplies Inc. is analyzing a project that requires an initial investment of $550,000. The project's expected cash flows are: Green Caterpillar Garden Supplies Inc.'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): 23.27% 18.42% 20.36% 19.39% If Green Caterpillar Garden Supplies Inc.'s managers select projects based on the MIRR criterion, they should Which of the following statements best describes the difference between the IRR method and the MIRR methc The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR mei initial investment to calculate the MIRR. this independent project. the terminal value of the The IRR method assumes that cash flows 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. The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the MIRR