Which of the following statements is CORRECT?
A) 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.
B) 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.
C) Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.
D) 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.

Question

Quizplus · Accepted Answer

C) Multiple IRRs can occur when there are unconventional cash flows (cash flow signs change more than once), but the MIRR method avoids this problem by assuming reinvestment at the project's cost of capital or some other rate, leading to only one MIRR value. This makes MIRR a more reliable measure for some investors compared to IRR.

Which of the Following Statements Is CORRECT