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Which one of the following methods of Capital Budgeting assumes that cash-inflows are reinvested at the projects rate of return ? |
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Answer» Modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at the firm's cost of capital, and 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. The MIRR more accurately reflects the cost and profitability of a project. |
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