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CA Inter Modified Internal Rate of Return — practice questions

Explore 34 free Modified Internal Rate of Return questions in CA Inter Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Modified Internal Rate of Return questions and exercises with answers

Showing questions 1–30 of 34.

MIRR assumes interim inflows are reinvested at roughly which rate?Read the answer and worked solution →Alternating cash flow signs can give what under IRR?Read the answer and worked solution →How many values does MIRR give for one project?Read the answer and worked solution →Negative cash flows in MIRR are discounted to time zero at which rate?Read the answer and worked solution →Why is IRR often too optimistic compared with MIRR?Read the answer and worked solution →Which Excel function computes MIRR?Read the answer and worked solution →Why can MIRR mislead when ranking projects of unequal size?Read the answer and worked solution →IRR is the rate that makes the NPV of all cash flows equal to what?Read the answer and worked solution →The maximum number of IRRs is limited by which feature of the cash flows?Read the answer and worked solution →A series of only negative cash flows has what IRR result?Read the answer and worked solution →Another name for the IRR is the discounted cash flow what?Read the answer and worked solution →In savings and loans, the IRR is also known as what?Read the answer and worked solution →IRR indicates profitability or yield, whereas NPV indicates what?Read the answer and worked solution →Which IRR type considers returns to shareholders after debt service?Read the answer and worked solution →Which IRR assumes cash flows directly benefit the project itself?Read the answer and worked solution →Why is the IRR described as internal?Read the answer and worked solution →Applied ex-ante, the IRR is best described as what?Read the answer and worked solution →A long, low-IRR project can still beat a short one on which measure?Read the answer and worked solution →If a project's IRR exceeds the firm's cost of capital, what follows?Read the answer and worked solution →A project costs 1,000 now and returns one lump of 1,331 after 3 years. MIRR?Read the answer and worked solution →An outlay of 2,000 today yields 2,880 after two years. Find the MIRR.Read the answer and worked solution →Outlay 1,000 with a terminal value of 1,690 at year 2 gives which MIRR?Read the answer and worked solution →A firm invests 500 and has a terminal value of 980 after 2 years. MIRR?Read the answer and worked solution →Outflows with PV 1,000 and inflows with TV 8,000 over 3 years give MIRR?Read the answer and worked solution →PV of outflows is 2,000 and terminal value is 3,456 after 3 years. MIRR?Read the answer and worked solution →Outflows worth 256 today grow to a terminal value of 1,296 in 4 years. MIRR?Read the answer and worked solution →An inflow of 1,000 at year 1 is reinvested at 10% until year 3. Value then?Read the answer and worked solution →Three yearly inflows of 1,000 are reinvested at 10%. Terminal value at year 3?Read the answer and worked solution →2,000 received at year 1 is reinvested at 5% for one year. Value then?Read the answer and worked solution →An outflow of 1,210 falls at year 2; finance rate 10%. PV at time zero?Read the answer and worked solution →

Worked practice questions

MIRR assumes interim inflows are reinvested at roughly which rate?

  1. The project's own IRR
  2. The firm's cost of capital
  3. The bank deposit rate
  4. The risk-free yield rate
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Correct answer: B. The firm's cost of capital

MIRR uses an assumed reinvestment rate that is usually set equal to the project's cost of capital.

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Alternating cash flow signs can give what under IRR?

  1. An undefined cost of capital
  2. A fixed IRR of zero percent
  3. A negative payback period
  4. More than one IRR value
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Correct answer: D. More than one IRR value

Each change in the sign of cash flows can add another root to the IRR equation, creating ambiguity.

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How many values does MIRR give for one project?

  1. No value at all
  2. Only one value
  3. One per sign change
  4. Two values always
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Correct answer: B. Only one value

Because all outflows and inflows are collapsed to a single present and future value, only one rate results.

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