The IRR evaluation method assumes that cash flows from the project are relvested at the same rate equal to the IR. However, in reality the reinvested cash flows may not necessary generate a retum equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's RR Consider the following station Blue Lima Mining Company is analyzing project that requires an initial investment of $600,000. The project's expected cash flows are: Year Cash Flow Yew 1$350,000 Year 2-125.000 Year 3 400,000 Year 4 475,000 Blue Liama Mining Company's WACC IS 10%, and the project has the same risk as the firm's average project. Calculate this project's modified interna rate of return (MIRR): 14.70% 20.21% 18.379 19.29 Ir Blue Llama Mining Company's managers select projects based on the MIRR enterion, they should this independent project. Which of the following statements best describes the difference between the IRR method and the MIRR method? The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR method uses the terminal value of the initial investment to calculate the MIRR The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the MIRR