One of the Investment Project:
| |||
|
|
where
total investment period | annual counter | ||
reinvestment rate | |||
positive cash flows | negative cash flows | ||
initial investment | |||
future value of the positive cash flows | present value of the negative cash flows |
The usual practise is to give preferences to the Investment Projects with higher MIRR and make a direct comparison of MIRR against the Weighted Average Cost of Capital (WACC).
MIRR is similar to IRR in nature but free from some common IRR issues.
The corporate investment policy usually dictates that:
Economics / Investment / Financial Investment / Financial Investment Metrics
[ Financial Investment Project ]
[ Weighted Average Cost of Capital (WACC) ] [ Cash Discount ] [ Net Present Value (NPV) ]
[ Internal Rate of Return (IRR) ]
|