Which of the following statements is CORRECT?
A) The MIRR and NPV decision criteria can never conflict.
B) The IRR method can never be subject to the multiple IRR problem,while the MIRR method can be.
C) One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
D) The higher the WACC,the shorter the discounted payback period.
E) The MIRR method assumes that cash flows are reinvested at the crossover rate.

Question

Quizplus · Accepted Answer

The MIRR method is based on a more reasonable reinvestment rate assumption because it assumes that cash flows are reinvested at the firm's cost of capital, while the regular IRR assumes that cash flows are reinvested at the project's IRR. This can lead to unrealistic reinvestment rate assumptions and make the IRR method less reliable in certain situations. The other statements are either incorrect or incomplete.

Which of the Following Statements Is CORRECT