The IRR evaluation method assumes that cash flows from the project are reinvested 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: Blue Uama Mining Company is analyzing a project that requires an initial investment of $550,000. The project's expected cash flows are: Blue Uama Mining Company's WACC is 10%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR): 16.40%21.53%18.45%20.50% If Qlve Uama Mining Company's managers select projects based on the MIRR criterion, they shouid this independent project. Which of the following statements best describes the difference between the IRR method and the MiRR mothod? The IRR method assumes that cash flows are reinvected at a rate of return equal to the inh. The Mirk method arsumes thot cash flows are reinvested at a rote of return equal to the cost of capital The IRR method uses only cash inflows to colculate the TrR, The MiRR method uses both cash infows and cash cuthlows to calialate the MIRR. The iss methed uses the present value of the initial ifvestment to caloulate the IRR. The Mring method isses the terminal walue of the Initial investment to calculote the Min/