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4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are relnvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Cute Camel Woodcraft Company is analyzing a project that requires an initial investment of $2,750,000, The project's expected cash flows are: Cute Camel Woodcraft Company's WACC is 10%, and the project has the same risk as the firm's average project. Caiculate this project's modified internal rate of return (MIRR): 17.73% 17.7396 21.05% 19.94% If Cute Camel Woodcraft Company's managers select projects based on the MIRR criterion, they should this independent project. Which of the following statements about the relationship between the IRR and the MIRR. is correct? A typical firm's IRR, will be greater than its MIRR. A typical firm's IRR will be less than its MIRR. A typical firm's IRR will be equal to its MIRR