CIMA Exam CIMAPRO19-P02-1 Topic 4 Question 65 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 65
Topic #: 4

Which of the following statements about modified internal rate of return (MIRR) and internal rate of return (IRR) is correct?

AMIRR uses a more realistic reinvestment assumption than IRR.

BMIRR favours projects with long payback periods whereas IRR does not.

CMIRR and IRR will always rank competing projects in the same order.

DA project's MIRR will always be higher than its IRR.

Show Suggested Answer

Suggested Answer: A

by Ozell at Feb 08, 2023, 07:04 PM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Hildegarde

10 days ago

D) A project's MIRR will always be higher than its IRR. Well, that's convenient! I guess the finance gods decided to make MIRR the 'above-average' sibling of the IRR family.

upvoted 0 times

...

B) MIRR favours projects with long payback periods whereas IRR does not. Interesting. I wonder if that means MIRR is better for evaluating long-term investments. Or maybe it just likes to torture project managers with endless calculations.

upvoted 0 times

...

Rossana

23 days ago

Hmm, that's interesting. Can you explain why you think that?

upvoted 0 times

...

Madonna

23 days ago

C) MIRR and IRR will always rank competing projects in the same order. Hmm, I'm not so sure about that. Isn't the whole point of MIRR to provide a different perspective on project ranking compared to IRR?

upvoted 0 times

...

Yolando

25 days ago

I disagree, I believe the correct statement is C) MIRR and IRR will always rank competing projects in the same order.

upvoted 0 times

...

Edna

25 days ago

D) A project's MIRR will always be higher than its IRR. Really? I thought MIRR was supposed to be more conservative than IRR. Guess I need to review the differences between these two metrics.

upvoted 0 times

...

Rossana

26 days ago

I think the correct statement is A) MIRR uses a more realistic reinvestment assumption than IRR.

upvoted 0 times

...

Hildegarde

1 months ago

A) MIRR uses a more realistic reinvestment assumption than IRR. This makes sense to me, as MIRR considers the actual rates at which cash flows can be reinvested, rather than just assuming a constant rate like IRR.

upvoted 0 times

Gilbert

2 days ago

Definitely, it's a better measure than IRR in that sense.

upvoted 0 times

...

Denny

7 days ago

So, MIRR is more accurate in evaluating projects.

upvoted 0 times

...

Huey

11 days ago

That's true, MIRR considers actual reinvestment rates.

upvoted 0 times

...

Tresa

12 days ago

I think A) MIRR uses a more realistic reinvestment assumption than IRR.

upvoted 0 times

...

CIMA Exam CIMAPRO19-P02-1 Topic 4 Question 65 Discussion

Contribute your Thoughts:

Hildegarde

Annamaria

Rossana

Madonna

Yolando

Edna

Rossana

Hildegarde

Gilbert

Denny

Huey

Tresa