Discuss why given assumption is problematic

Reference no: EM131142670

In capital budgeting, the IRR implicitly assumes reinvestments of interim cash flows at the IRR itself.

First, discuss why this assumption is problematic.

Then, explain how MIRR address this issue by presenting your own unique example with proper calcuations.

The example project should be a 4 year project. For example, a 4-year project with following cash flows, -500, 200, 200, 200, 100, at T=0 to 4, respectively.

Reference no: EM131142670

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