How is the MIRR better than the IRR method of capital budgeting?

Question

Quizplus · Accepted Answer

The MIRR (Modified Internal Rate of Return) method of capital budgeting is considered better than the IRR (Internal Rate of Return) method because it takes into account the cost of capital while calculating both present and future values. In contrast, the IRR method assumes that all cash inflows are reinvested at the project's rate of return, which may not be realistic. Thus, the MIRR method is more accurate in determining whether a project is profitable or not.

How Is the MIRR Better Than the IRR Method of Capital