• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

MIRR

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › MIRR

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • December 3, 2020 at 4:57 am #597444
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    sir from your lectures and my own understanding i have understood that MIRR is the return that an entity gets if proceeds are reinvested at cost of capital. However, isn’t the cost of capital a company’s borrowing rate? So then are we assuming that company’s cost of capital, or in other words its borrowing rate is same as its deposit rate?

    Better still why can’t we just use risk free rate to find out company’s MIRR, as in assume that the reinvestment rate would be at risk-free rate? this although will give us a conservative MIRR, but its obviously better than overestimating the MIRR and taking up the project assuming that reinvestment rate would be same WACC( deposit rate in my opinion would be less than WACC).

    December 3, 2020 at 10:26 am #597478
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51950
    • ☆☆☆☆☆

    The MIRR is really just a way of arriving at a measure that can be used in the same way as the IRR but that will always arrive at the same decision when comparing investments as does choosing the one with the highest NPV.

    Although standardly we take about the assumption regarding reinvestment, it is actually meaning that the returns are used to pay of borrowings and therefore save interest at the cost of capital.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

Changes to the SBL exam from September 2023

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

 

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on CAPM and MM Combined – ACCA Financial Management (FM)
  • Rana Nabeel on CAPM and MM Combined – ACCA Financial Management (FM)
  • John Moffat on Investment Appraisal Under Uncertainty: Sensitivity Analysis (example 1) – ACCA Financial Management (FM)
  • DIVIJ on Investment Appraisal Under Uncertainty: Sensitivity Analysis (example 1) – ACCA Financial Management (FM)
  • John Moffat on Interpretation of Financial Statements part a – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy