The MIRR statistic is different from the IRR statistic in that
A) the MIRR assumes that the cash inflows can be reinvested at the cost of capital.
B) the MIRR assumes that the cash inflows can be reinvested at the IRR.
C) the MIRR uses weighted average dollars.
D) the MIRR uses input from the NPV whereas the IRR does not.

Question

Quizplus · Accepted Answer

The Modified Internal Rate of Return (MIRR) differs from the Internal Rate of Return (IRR) because it assumes that cash inflows are reinvested at the project's cost of capital, rather than at the IRR itself. This provides a more realistic view of the project's profitability.

The MIRR Statistic Is Different from the IRR Statistic in That