8. 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 miry not necessarily generate a retum equal to the IRR. Thus, the modified IRR approach makes a mere reasonable assumption other than the project's IRR. Consider the following situation: Green Caterpillar Garden Supplies Inc. is analyzing a project that reguires an uitial investment of $450,000. The project's expected cash flows are: Green Caterpillar Garden Supplies Incis WhCC is 9%, and the project has the same risk as the firm's average project, Calculate this project's modfied inteinal rate of return (MIRR). 23.55% 72.374 21.20% 28.26% II Green Caterpillar Garden-Supplies Incis managers salect pojects based on the MIRA Gikerion, they,should thes independent project. Which of the following staternents best desorbes the difference between the IRR method and the MIRR method? The ite method uses the present value of the initsal investment to calculate the IRR. The MipR method uses the terminal value of thet initaal investment to calculate the MiRh. The IRR method uses only cash inflows to calculate the IRI. The MIRR method uses both cash inflows and cash outhlows to calculate the MIRR. The IRR method assumes that cash flows are reinvested at a rate of retum equal to the IRR. The MiRh method assumes that cash flows are reinvested at a rate of return equal to the cost of capital