alleryStart learning →MIRR assumes interim inflows are reinvested at roughly which rate?
AThe project's own IRR
BThe firm's cost of capital
CThe bank deposit rate
DThe risk-free yield rate
Answer & Solution
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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Related questions
Terminal value 7,600 and outflow PV 4,636.36 over 3 years give MIRR near?Outlay 2,000 now; inflows 1,100 (yr 1), 1,210 (yr 2); reinvestment 10%. MIRR?Outflows 1,000 now and 1,100 at year 1 (finance 10%); inflow 2,880 at year 2. MIRR?Outflows are 1,000 now and 1,100 at year 1; finance rate 10%. PV of outflows?An outflow of 1,210 falls at year 2; finance rate 10%. PV at time zero?2,000 received at year 1 is reinvested at 5% for one year. Value then?Three yearly inflows of 1,000 are reinvested at 10%. Terminal value at year 3?An inflow of 1,000 at year 1 is reinvested at 10% until year 3. Value then?