Which of the following statements about the relationship between the IRR and the MIRR is correct? A typical firm's IRR will be greater than its MIRR. A typical firm's IRR will be less than its MIRR. A typical firm's IRR will be equal to its MIRR.
Which of the following statements about the relationship between the IRR and the MIRR is correct? A typical firm's IRR will be greater than its MIRR. A typical firm's IRR will be less than its MIRR. A typical firm's IRR will be equal to its MIRR.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...
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Introduction
The IRR is the investment discount rate that corresponds to the difference between the original capital outlay and the present value of expected cash flows. It's a discount rate at which the NPV of all a project's cash flows equals zero.
MIRR is the price in an investment plan that equalises the most recent cash inflow with the most recent cash outflow. It's a variant of IRR in which the NPV of inflows (cash flows) equals the NPV of outflows (investments).
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