Question

In: Finance

in your opinion is mirr superior to irr calculations as an indicator of project value

in your opinion is mirr superior to irr calculations as an indicator of project value

Solutions

Expert Solution

Yes, Marginal Internal rate of return is a superior indicator than internal rate of return because marginal internal rate of return can be used in case of uneven cash flow streams whereas internal rate of return can only used in case of conventional cash flow streams which are having just one outflow, because if it is used in uneven cash flow streams that it will be providing us with multiple internal rate of return which will be difficult for decision-making and Hence, marginal internal rate of return is a Better indicator than internal rate of return.

Marginal internal rate of return are also providing other benefit in relation to investment at different rates because internal rate of return will be taking the constant rate for the investment which is not applicable in the real world and has marginal internal rate of return is a Better indicator than internal rate of return.


Related Solutions

What is NPV, IRR, PI, MIRR of a project with the following cash flows if the...
What is NPV, IRR, PI, MIRR of a project with the following cash flows if the discount rate is 14 percent? Year CF 0 -18,000    1 5000 2 7500 3 8400 4 2100 Also upload your excel files showing your work.
Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each.
11.  Problem 10-08 (NPVs, IRRs, and MIRRs for Independent Projects)NPVs, IRRs, and MIRRs for Independent ProjectsEdelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $18,000, and that for the pulley system is $22,000. The firm's cost of capital is 14%. After-tax cash flows, including depreciation, are as follows:YearTruckPulley1$5,100$7,50025,1007,50035,1007,50045,1007,50055,1007,500Calculate the IRR, the NPV, and the MIRR for each project,...
What is the difference between IRR and MIRR ? Explain with an example.
What is the difference between IRR and MIRR ? Explain with an example.
. Complete problems: NPV, IRR, MIRR, Profitability Index, Payback, Discounted Payback A project has an initial...
. Complete problems: NPV, IRR, MIRR, Profitability Index, Payback, Discounted Payback A project has an initial cost of $60,000, expected net cash inflows of $10,000 per year for 8 years, and a cost of capital of 12%. Show your work. a. What is the project’s NPV? (Hint: Begin by constructing a timeline). b. What is the project’s IRR? c. What is the project’s MIRR? d. What is the project’s PI? e. What is the project’s payback period? f. What is...
Apple's Project NPV ($) 10,258 IRR (%) 13 MIRR (%) 10 PI 1.5 Payback (Years) 3...
Apple's Project NPV ($) 10,258 IRR (%) 13 MIRR (%) 10 PI 1.5 Payback (Years) 3 Discounted Payback (years) 3.5 Apple's cost of capital is 9%. Its critical payback and discounted payback periods are 2 and 2.5. Should the project be accepted or not. NPV - (Accept or Do Not Accept) IRR - (Accept or Do Not Accept) MIRR - (Accept or Do Not Accept) PI - (Accept or Do Not Accept) Payback - (Accept or Do Not Accept) Discounted...
​(​NPV, ​PI, and IRR calculations​) You are considering two independent​ projects, project A and project B....
​(​NPV, ​PI, and IRR calculations​) You are considering two independent​ projects, project A and project B. The initial cash outlay associated with project A is ​$50,000​ and the initial cash outlay associated with project B is ​$70,000 The required rate of return on both projects is 9 percent. The expected annual free cash inflows from each project are in the popup​ window: Calculate the NPV​, PI​, and IRR for each project and indicate if the project should be accepted.   ...
(​NPV, ​PI, and IRR calculations​) You are considering two independent​ projects, project A and project B....
(​NPV, ​PI, and IRR calculations​) You are considering two independent​ projects, project A and project B. The initial cash outlay associated with project A is ​$50,000 and the initial cash outlay associated with project B is ​$70,000 The required rate of return on both projects is 12 percent. The expected annual free cash inflows from each project are in the popup​ window: .Calculate the NPV​, PI​, and IRR for each project and indicate if the project should be accepted. a....
NPV,​ PI, and IRR calculations​) You are considering a project with an initial cash outlay of...
NPV,​ PI, and IRR calculations​) You are considering a project with an initial cash outlay of ​$70,000 and expected free cash flows of ​$28,000 at the end of each year for 6 years. The required rate of return for this project is 7 percent. a. What is the​ project's payback​ period? b. What is the​ project's NPV​? c. What is the​ project's PI​? d. What is the​ project's IRR​?
In your own words Specifically, provide an explanation of payback period, IRR, MIRR and NPV. Also,...
In your own words Specifically, provide an explanation of payback period, IRR, MIRR and NPV. Also, explain how business’ use these for decisions and the potential advantages/disadvantages of each.
What is the reasoning for calculating a MIRR instead of just the IRR? Are there any...
What is the reasoning for calculating a MIRR instead of just the IRR? Are there any circumstances in which the two methods provide the same solution?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT