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The internal rate of return method assumes

03.03.2021

Wickizer39401

The internal rate of return method assumes that the cash flows generated by the project are immediately reinvested elsewhere at a rate of return that equals the internal rate of return. true The internal rate of return is computed by finding the discount rate that maximizes the difference between the present value of a project's cash outflows and the present value of its cash inflows. The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at the firm's cost of capital and that the initial outlays are financed at the firm's financing cost. By contrast, the traditional internal rate of return (IRR) assumes the cash flows from a project are reinvested at the IRR itself. The internal rate of return method assumes that the cash flows generated by the project are immediately reinvested elsewhere at a rate of return that equals the internal rate of return. True False Start studying Chapter 16 Acct 202. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Search. Create. Log in Sign up. Log in Sign up. Chapter 16 Acct 202. The internal-rate-of-return method assumes that project funds are reinvested at the: A. hurdle rate.

NPV is Superior – 1) Reinvestment rate assumptions • NPV method assumes intermediate CFs are reinvested at the cost of capital. • IRR method assumes

Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. Internal rate of return is used to evaluate the attractiveness of a project or investment. The internal rate of return is a measure of an investment’s rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or various financial risks. It is also called the discounted cash flow rate of return.

False Your answer is correct. The IRR method assumes that cash flows will be reinvested at the internal rate of return. The NPV method assumes the cash flows

4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR.

Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. Internal rate of return is used to evaluate the attractiveness of a project or investment. If the IRR of a new project exceeds a company’s required rate of return, that

The method assumes that the net cash inflows generated through the project life will be reinvested to earn the same return as the IRR, but this may not be IRR assumes that the cash flows are reinvested at Given the shortcomings of the method,

False Your answer is correct. The IRR method assumes that cash flows will be reinvested at the internal rate of return. The NPV method assumes the cash flows

internal rate of return (MIRR) techniques are used to study the profitability of the project. MIRR is a relatively the IRR method and it assumes that the project's. Net present value vs internal rate of return. Independent vs dependent projects. NPV and IRR methods are closely related because: i) both are time-adjusted