Assumes reinvestments of interim cash flows

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Reference no: EM13814061

In capital budgeting, the IRR implicitly assumes reinvestments of interim cash flows at the IRR itself. First, discuss why this assumption is problematic. Then, explain how MIRR address this issue by presenting your own unique example with proper calculations. The example project should be a 4 year project. For example, a 4-year project with following cash flows, -500, 200, 200, 200, 100, at T=0 to 4, respectively.

Reference no: EM13814061

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