The IRR evaluation methad assumes that cash flows from the project are reinvested at the same rate equal to the IRR. Howevec, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approsch makes ad more reasonable assumption other than the project's IRR. Consider the following situation: Fuzzy Button Clothing Company is analyzing a project that requires an intial investment of $3,225,000. The project's expected cash fows are: Furry Button Clothing Company's WACC is 9%, and the project has the same risk as the firm's average project. Cakulate this project's modined intemal rate of return (MIRR): 20.58% 13.1306 15.59% 18.87% If Furzy Button Clothing Company's managers select projects based on the Miar criterion, they should this independent project. The IRR evaluation methad assumes that cash flows from the project are reinvested at the same rate equal to the IRR. Howevec, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approsch makes ad more reasonable assumption other than the project's IRR. Consider the following situation: Fuzzy Button Clothing Company is analyzing a project that requires an intial investment of $3,225,000. The project's expected cash fows are: Furry Button Clothing Company's WACC is 9%, and the project has the same risk as the firm's average project. Cakulate this project's modined intemal rate of return (MIRR): 20.58% 13.1306 15.59% 18.87% If Furzy Button Clothing Company's managers select projects based on the Miar criterion, they should this independent project