How does modified internal rate of return (MIRR)differ from IRR?
A)MIRR does not consider cash flows occurring after the cut-off date.
B)MIRR uses NPV, IRR does not.
C)MIRR calculates the PV of cash inflows and then divides by the PV of the investment.
D)MIRR reduces the number of sign changes in a cash flow sequence.

Question

Quizplus · Accepted Answer

MIRR reduces the number of sign changes in a cash flow sequence by reinvesting intermediate cash flows at a reinvestment rate, while IRR assumes reinvestment at the project's internal rate of return.

How Does Modified Internal Rate of Return (MIRR)differ from IRR