he IRR evaluation method assumes that cash flows from the project are feinvested at the same rate equal to the IRR. However, in reality the einvested cash flows may not necassarily gencate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonathe ascumption other than the projed's ItrR. Corsider the following situation: Green Caterpillar Garden Supplies Inc, is analyzing a project that requires an initial investment of $450,000. The project's expeded cash flows are: Green Caterpiliar Garden Supplies Incis wACC is 8%, and the project has the same risk as the fitm's average project. Calculate this project's modified internal rate of return (MIRR): 24.43% Green Caterpifiar Garden Supplies lnc.: WAcC is 8th, and the project has the some riak as the firm's average projed. Caloulatm this project's moeified internal rate of retum (MIRR): 24.43%25.65%23.215%21.99%6 If Grobn Caterpiliar Garden Supplies Inci's managers select projects based on the Mrer aiterion, they should this indenendent project Whict of the following staternerts beet derscribes the diference between the IPR method and the HiRe methed? The iRR method uses the present valee of the initial investment to calcalate the IRR. The MigR method uses the temminal value of the initial investment to calculate the Mipr. The IRR metfiod ases only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the MIRH: The IRR method assumes that cash flows are reimvested at a rate of return equal to the IRR. The MirR method assumes that cash floves are reinvested at a rate of return equal to the cost of capital