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CIMA Exam CIMAPRO19-P02-1 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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Hildegarde
8 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.
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Annamaria
10 days 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
21 days ago
Hmm, that's interesting. Can you explain why you think that?
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Madonna
21 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?
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Yolando
23 days 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
23 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.
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Rossana
24 days ago
I think the correct statement is A) MIRR uses a more realistic reinvestment assumption than IRR.
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Hildegarde
29 days 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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Denny
5 days ago
So, MIRR is more accurate in evaluating projects.
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Huey
9 days ago
That's true, MIRR considers actual reinvestment rates.
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Tresa
10 days ago
I think A) MIRR uses a more realistic reinvestment assumption than IRR.
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