Business executives often prefer to work with rate of return, so to overcome some of the IRR's limitations the modified IRR was

Question

vova2212 [387]

3 years ago

15

Business executives often prefer to work with rate of return, so to overcome some of the IRR's limitations the modified IRR was

devised. The MIRR equation is:

Business

1 answer:

Ksju [112] · Answer 1 · 2022-03-16T14:35:51+03:00

Answer:

Explanation:

MIRR equation is given by :

[(FV +ve cashflow / PV -ve cashflow)^(1/n)] - 1

FV +ve cashflow = Future value of positive cashflow at reinvestment rate

PV - ve cashflow = Present value of negative cashflow at finance rate

n = number of periods

The Modified Internal Rate of Return is a devised modification for the Internal rate of return, IRR which gives rate of return on percentage and overcomes the limitations of the IRR formula.