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    New Learning: IRR vs. MIRR Valuation Methods

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    The paper must

    (a) identify the main issues in the chosen area,
    (b) new learning that has occurred,
    (c) class activities or incidents that facilitated learning and understanding, and
    (d) specific current and/or future applications and relevance to the workplace.

    The emphasis of the paper should be on application of new learning.

    The Paper:

    If possible, provide a context of a first-person experience where you saw this academic concept in operation. Do not simulate third-party statements of experience.

    Readdress the concept and the experience with critical thought. That is, what is your response to the content, either positive or negative, and then defend your position. If multiple options/alternatives/positions are present and are being rejected you must also defend the reasons for rejecting an option.

    Must conclude with a restatement of the thesis and a conclusion paragraph.

    Must include, on the final page, a Reference List that is completed according to APA style as outlined in the approved APA style guide.

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    https://brainmass.com/business/capital-budgeting/new-learning-irr-mirr-valuation-methods-417595

    Solution Preview

    Please refer to the attached file for the response.

    IRR AND MIRR VALUATION METHODS: A COMPARISON

    INTRODUCTION
    Companies are commonly faced with a situation where, in order to survive or stay in the industry and remain competitive, must come up with well calculated financing decisions. These decisions are critical and do not only directly involve one functional area of business but involve all. To buy or not to buy machinery or equipment now or few years later would mean a lot to production, human resources, and marketing. To pursue or not to pursue an investment endeavor which is putting up a new marketing territory will mean a lot to the company's survival and competitiveness. To lease or just to put up a building for the company's manufacturing plant will mean a lot to the company's ability to cope with existing financial obligations, its ability to take advantage of a business opportunity, ability to provide attractive compensation package to its employees, and ability to produce within the expectations of the end users.

    The above cited instances are only a few among the situations faced by a firm that involve capital budgeting decisions or decisions that require comparing the expected cash inflows with the cash outflows, with due consideration of cost of capital, expectation of shareholders, economic life of the intended project, the image of the company in the community, and the overall performance of the business.
    These indicate that making correct decisions are crucial to the overall value of the firm. However, it is important to note that correct decisions are only made possible through correct and adequate information that formed the basis of the decision. This correct and adequate information are products of appropriate capital budgeting or valuation tools. Among them are the IRR (Internal Rate of Return) and the MIRR (Modified Internal Rate of Return).

    PROBLEM STATEMENT

    This paper would answer the following questions:
    1. How would the two methods (IRR and MIRR) be described as capital budgeting valuation tools?
    2. Which tool would provide more adequate and ...

    Solution Summary

    This solution provides a sample finance paper, which discusses the internal rate of return (IRR) and compares it to the modified internal rate of return (MIRR).

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