As there are changes in signs, there are two roots of the equation. So,
there are two internal rates of return for the project. Which one should
be taken for the appraisal becomes difficult for appraiser to difficult?
MODIFIED INTERNAL RATE OF RETURN (MIRR)
Even though NPV is a better method conceptually than the IRR method,
most managers prefer IRR over NPV since IRR is a percentage measure. A
percentage measure that overcomes the shortcomings of regular IRR is
known as modified internal rate of return (MIRR).
The procedure for calculating MIRR is given below: |
|
More Classifications...
