The modified internal rate of return assumes that

Question

Quizplus · Accepted Answer

The modified internal rate of return (MIRR) assumes that cash inflows are reinvested at the cost of capital, rather than at the project's internal rate of return (IRR) as assumed in traditional IRR calculations. This more accurately reflects the real world where firms reinvest their cash inflows to generate a return that is in line with the cost of capital. Outflows can be funded with either debt or equity and this is not a consideration in calculating the MIRR.

The Modified Internal Rate of Return Assumes That