Which of the following statements is CORRECT?
A) For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
B) Multiple IRRs can exist, but not multiple MIRRs.This is one reason some people favor the MIRR over the regular IRR.
C) If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
D) The percentage difference between the MIRR and the IRR is equal to the project's cost of capital.
E) The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.

Question

Quizplus · Accepted Answer

Multiple IRRs can exist for projects with non-normal cash flows, which can create confusion and make it difficult to determine the IRR of a project. The MIRR method, on the other hand, does not suffer from this issue and only produces one result. This is why some people prefer the MIRR over the regular IRR method. The other statements are incorrect.

Which of the Following Statements Is CORRECT