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

Which of the following statements about modified internal rate of return (MIRR) and internal rate of return (IRR) is correct?
A) MIRR uses a more realistic reinvestment assumption than IRR.
B) MIRR favours projects with long payback periods whereas IRR does not.
C) MIRR and IRR will always rank competing projects in the same order.
D) A project's MIRR will always be higher than its IRR.

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

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 65
Topic #: 4
[All CIMAPRO19-P02-1 Questions]

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

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Suggested Answer: A

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

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Cecily
10 months ago
C is false, MIRR and IRR can rank projects differently.
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Fletcher
10 months ago
Wait, D can't be right all the time, can it?
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Laurel
10 months ago
B seems off, IRR can also favor long payback projects.
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Theresia
11 months ago
Totally agree with A, IRR can be misleading!
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Erick
11 months ago
A is true, MIRR does use a better reinvestment rate.
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Kaitlyn
11 months ago
I vaguely recall that MIRR and IRR can sometimes rank projects differently, especially if cash flows are unconventional. So, I’m leaning towards option A as well.
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Amie
11 months ago
I think option A is correct because MIRR does use a more realistic reinvestment rate, but I’m not 100% certain about the other options.
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Kiley
11 months ago
I’m not entirely sure, but I think MIRR might favor projects with longer payback periods? I feel like I saw a question like that in our practice exams.
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Chantay
11 months ago
I remember that MIRR is supposed to give a better picture of the project's profitability because it assumes reinvestment at the cost of capital, unlike IRR.
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Ena
11 months ago
This seems like a pretty straightforward question about testing controls over sales transactions. I think the key is to focus on procedures that would help verify the completeness of recorded sales.
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Cecilia
11 months ago
Hmm, I'm a bit unsure about this one. I know we need to configure something related to Webex Teams, but I'm not sure about the other element. Maybe the gRPC credentials?
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Tish
11 months ago
Wait, I'm a bit confused. Is this asking about authentication issues, privacy vulnerabilities, privacy threat vectors, or reportable privacy violations? I'll have to re-read the question and options carefully to make sure I understand what they're looking for.
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Clorinda
11 months ago
I found similar practice questions mentioning User Agent Accessibility Guidelines, but they seemed more about how browsers handle accessibility rather than web content itself.
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Hildegarde
1 year 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.
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Billi
1 year ago
D) A project's MIRR will always be higher than its IRR.
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Brendan
1 year ago
C) MIRR and IRR will always rank competing projects in the same order.
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Theodora
1 year ago
A) MIRR uses a more realistic reinvestment assumption than IRR.
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Annamaria
1 year ago
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.
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Rossana
1 year ago
Hmm, that's interesting. Can you explain why you think that?
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Madonna
1 year 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?
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Ben
1 year ago
C) MIRR and IRR will always rank competing projects in the same order.
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Ben
1 year ago
A) MIRR uses a more realistic reinvestment assumption than IRR.
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Yolando
1 year ago
I disagree, I believe the correct statement is C) MIRR and IRR will always rank competing projects in the same order.
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Edna
1 year 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.
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Rossana
1 year ago
I think the correct statement is A) MIRR uses a more realistic reinvestment assumption than IRR.
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Hildegarde
1 year 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.
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Gilbert
1 year ago
Definitely, it's a better measure than IRR in that sense.
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Denny
1 year ago
So, MIRR is more accurate in evaluating projects.
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Huey
1 year ago
That's true, MIRR considers actual reinvestment rates.
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Tresa
1 year ago
I think A) MIRR uses a more realistic reinvestment assumption than IRR.
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