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What makes Internal Rate of Return different from Modified Rate of Return in Investment appraisals?
Internal Rate of Return which present value of cash in-flows with present value of cash ouf-flows. In other words IRR is a discount rate at which Net-Present-Value of a project is equal to zero or nearest to zero.
In Modified Internal Rate of Return, all cash in-flows are first markedup to their terminal value. Secondly we determine a discount rate which equates terminal value of cash-inflows to the iniial cash out-lay.
MIRR can not have more than one value like IRR.
Agreed with Ahmed.
We calculate terminal value in MIRR but not the case in calculating IRR.
