alleryStart learning →Negative cash flows in MIRR are discounted to time zero at which rate?
AThe accounting return
BThe project's own IRR
CThe reinvestment rate
DThe external finance rate
Answer & Solution
Correct answer: D. The external finance rate
Outflows are discounted to time zero with the external finance rate, which represents the cost of funding them.
Keep practising Modified Internal Rate of Return
Browse all Modified Internal Rate of Return questions for CA Inter, or explore more Financial Management topics.
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?