The MIRR method is better than the IRR method because:

Question

Quizplus · Accepted Answer

The MIRR method is better than the IRR method because it explicitly reinvests the cash flows from the project at the cost of capital, which is more realistic than assuming the cash flows are reinvested at the project's internal rate of return. Additionally, the MIRR method eliminates the possibility of having multiple IRRs, which can create confusion when comparing projects. Therefore, the combination of a and b makes the MIRR method superior to the IRR method.

The MIRR Method Is Better Than the IRR Method Because