Which one of the following is a project acceptance indicator given an independent project with investing type cash flows?
A)profitability index less than 1.0
B)project's internal rate of return less than the required return
C)discounted payback period greater than requirement
D)average accounting return that is less than the internal rate of return
E)modified internal rate of return that exceeds the required return

Question

Quizplus · Accepted Answer

The modified internal rate of return (MIRR) is a more accurate measure of a project's potential profitability because it assumes that cash flows are reinvested at the firm's cost of capital rather than at the project's internal rate of return. If the MIRR exceeds the required return, it indicates that the project is expected to generate a return that is greater than the cost of capital, making it an indication of project acceptance.

Which One of the Following Is a Project Acceptance Indicator