Grey Fox Aviation Company's WACC is 6%, and the project has the same risk as the firm's average project. Calculate this project's modified internal

rate of return (MIA)

Ⓒ 13.9%

O 16.34%

O 14.71%

O 17.97%

If Grey Fox Aviation Company's managers select projects based on the MIRR criterion, they should

Which of the following statements best describes the difference between the IRR method and the

The IRR method uses the present value of the intal investment to calculate the IRR. The

initial investment to calculate the MORR

this independent project

accept?

reject

O 14.71%

17.97%

Jehod uses the terminal value of the

O The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the

MIRR

The IRR method assumes that cash flows are reinvested at a rate of retum equal to the IRR. The MIRR method assumes that cash flows

are reinvested at a rate of return equal to the cast of capital.

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this independent project.

If Grey Fox Aviation Company's managers select projects based on the MIRR criterion, they should

Which of the following statements best describes the difference between the IRR method and the MDRR method?

O The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR method uses the terminal value of the

initial investment to calculate the MIRR

O The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the

MIRR.

The IRR method assumes that cash flows are reinvested at a rate of retum equal to the IRR. The MIRR method assumes that cash flows

are reinvested at a rate of return equal to the cost of capital.

Grade It Now

Save & Continue