For any individual project,if the project is acceptable based on its internal rate of return,then the project will also be acceptable based on its modified internal rate of return.

Question

Quizplus · Accepted Answer

The modified internal rate of return (MIRR) is just a different way of calculating the internal rate of return (IRR) that assumes any cash inflows are reinvested at a specific rate and any outflows are financed at a different rate. MIRR and IRR will always provide the same investment decision if the project's cash flows are conventional (where there is only one sign change in the cash flow pattern), but MIRR may provide a different result for non-conventional cash flows. However, if a project is acceptable based on its IRR, then it will also be acceptable based on its MIRR because both methods are based on the same underlying concept of time value of money. In other words, if the project's cash flows can generate a rate of return that meets or exceeds the required rate of return, then the project is considered acceptable regardless of the method used to calculate the rate of return.

For Any Individual Project,if the Project Is Acceptable Based on Its