Which of the following statements is correct?
A)When dealing with independent projects, discounted payback (using a payback requirement of 3 or less years), NPV, IRR, and modified IRR always lead to the same accept/reject decisions for a given project.
B)When dealing with mutually exclusive projects, the NPV and modified IRR methods always rank projects the same, but those rankings can conflict with rankings produced by the discounted payback and the regular IRR methods.
C)Multiple rates of return are possible with the regular IRR method but not with the modified IRR method, and this fact is one reason given by the textbook for favoring MIRR (or modified IRR) over IRR.
D)Statements a, b and c are all false.

Question

Quizplus · Accepted Answer

The regular IRR method can result in multiple rates of return when there are non-conventional cash flows, whereas the modified IRR (MIRR) method resolves this issue by assuming reinvestment at the project's cost of capital.

Which of the Following Statements Is Correct