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please find the MIRR and if they should accept or reject the project. thank you!! 8. Modified internal rate of return (MIRR) The IRR evaluation
please find the MIRR and if they should accept or reject the project. thank you!!
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 may not necessarlly generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Blue Lama Mining Company is analyzing a project that requires an initial investment of $2,225,000. The project's expected cash flows are: Blue Llama Mining Company's WACC is 7%, and the profect has the same risk as the firm's average project. Calculate this project's modificd internal rate of retum (MIRR): 20.78% 23.38% 27.28% 12.52% If Blue Lama Mining Company's managers select projects based on the MIRR criterion, they should this independent project. Which of the following statements about the relationship between the IRR and the MIRR is correct? A typical firm's IRR will be greater than its MIRR. A typical firm's IRR will be equal to its MIRR. A typical firm's tRR will be less than its MIRR Step by Step Solution
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