Business executives often prefer to work with $-$Select$-$dollarpercentageCorrect $1$ of Item $1$ rate of return, so to overcome some of the IRR's limitations the modified IRR was devised. The MIRR equation is:

While the IRR's reinvestment rate assumption is the IRR, the MIRR's reinvestment rate assumption is the project's $-$Select$-$WACCNPVMIRRCorrect $2$ of Item $1.$ As a result, the MIRR is generally a better indicator of a project's true $-$Select$-$breakevenliquidityriskprofitabilityCorrect $3$ of Item $1$ than IRR. Unlike the IRR, there can $-$Select$-$alwaysneverCorrect $4$ of Item $1$ be more than one MIRR, and the MIRR can be compared with the project's $-$Select$-$WACCNPVcostCorrect $5$ of Item $1$ when deciding to accept or reject projects. For $-$Select$-$dependentindependentCorrect $6$ of Item $1$ projects, the NPV$,$ IRR, and MIRR always reach the same accept$/$reject conclusion; so the three criteria are equally good when evaluating $-$Select$-$dependentindependentCorrect $7$ of Item $1$ projects. If projects are mutually exclusive and they differ in size, conflicts in project acceptance $-$Select$-$can notcanCorrect $8$ of Item $1$ arise. In these cases, the $-$Select$-$IRRNPVMIRRCorrect $9$ of Item $1$ is the best decision method because it selects the project that maximizes firm value.

While the IRR's reinvestment rate assumption is the IRR, the MIRR's reinvestment rate assumption is the project's$-$Select$-$WACCNPVMIRRCorrect $2$ of Item $1.$ As a result, the MIRR is generally a better indicator of a project's true$-$Select$-$breakevenliquidityriskprofitabilityCorrect $3$ of Item $1$than IRR. Unlike the IRR, there can$-$Select$-$alwaysneverCorrect $4$ of Item $1$be more than one MIRR, and the MIRR can be compared with the project's$-$Select$-$WACCNPVcostCorrect $5$ of Item $1$when deciding to accept or reject projects. For$-$Select$-$dependentindependentCorrect $6$ of Item $1$projects, the NPV$,$ IRR, and MIRR always reach the same accept$/$reject conclusion; so the three criteria are equally good when evaluating$-$Select$-$dependentindependentCorrect $7$ of Item $1$projects. If projects are mutually exclusive and they differ in size, conflicts in project acceptance$-$Select$-$can notcanCorrect $8$ of Item $1$arise. In these cases, the$-$Select$-$IRRNPVMIRRCorrect $9$ of Item $1$is the best decision method because it selects the project that maximizes firm value.