Q459
A modified internal rate of return is considered as present value of costs and is equal to
A.
PV of hurdle rate
B.
FV of hurdle rate
C.
PV of terminal value
AnswerD.
FV of terminal value
Answer: Option C
Solution
Answer: Option C
Solution:
A modified internal rate of return is considered as present value of costs and is equal to PV of terminal value. The present value (PV) of the terminal value is then added to the PV of the free cash flows in the projection period to arrive at an implied firm value.