# 3 which method is best why whether npv or irr gives

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(3) Which method is best? Why?
Note, however, that NPV and IRR always give the same accept/reject decisions for independent projects, so IRR can be used just as well as NPV when independent projects are being evaluated. The NPV versus IRR conflict arises only if mutually exclusive projects are involved. G. (1) Define the term modified IRR (MIRR). Find the MIRRs for Projects L and S.
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PV of costs = (100.00) 10 60 80.00 66.00 12.10 TV of inflows = 158.10 PV of TV =100.00 MIRR = ? \$100 = PV costs = MIRR L = 16.5%. MIRR S = 16.9%. (2) What are the MIRR’s advantages and disadvantages vis-à-vis the NPV?
executives from Du Pont, Hershey, and Ameritech, among others, all reported a switch from IRR to MIRR. H. (1) What is the payback period? Find the paybacks for Projects L and S.
-90 -30 50 Project L s \$100 investment has not been recovered at the end of Year 2, but it has been more than recovered by the end of Year 3. Thus, the recovery period is between 2 and 3 years. If we assume that the cash flows occur evenly over the year, then the investment is recovered \$30/\$80 = 0.375 ≈ 0.4 into Year 3. Therefore, Payback L = 2.4 years.