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Management · Q462

Financial Management

Graduate and Post Graduate · Management · question 462

Q462

Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is

A.
positive
Answer
B.
negative
C.
zero
D.
one

Answer: Option A

Solution

Answer: Option A
Solution:
Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is positive. The modified internal rate of return is a financial measure of an investment's attractiveness. It is used in capital budgeting to rank alternative investments of equal size. As the name implies, MIRR is a modification of the internal rate of return and as such aims to resolve some problems with the IRR.