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 eash flows may not necessarily 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: Grey Fox Aviation Company is analyzing a project that requires an initial investment of $2,500,000. The project's expected cash flows are: Grey Fox Aviation Company's. WACC is 7%, and the project has the same risk as the firm's average project. Caiculate this project's modified internal rate of retum (MtRa): 16.78%19.50%18.48%22.58% If Grey Fox Aviation Company's managers select projects based on the Mtror criterion, they should this independent project. Which of the following statements about the relationship between the IRR and the Miar is correct? A trpical firm's tRR will be greater than its MLRR