This indicator takes into account that the company will reuse the cash flows from a project. By measuring the effect of reinvesting these cash flows it gives priority to cash flows that come earlier in a projects life. Thus it combines the effect of the payback period and the IRR in one calculation.
The difference in the two company's modified IRR's is not as large as the standard IRR. However, Corporation B
Capital Budgeting Simulation
Summary of Financi. (1969, December 31). In LotsofEssays.com. Retrieved 12:45, May 07, 2024, from https://www.lotsofessays.com/viewpaper/1705713.html
Lots of Essays. "Capital Budgeting Simulation
Summary of Financi." LotsofEssays.com. LotsofEssays.com, (December 31, 1969). Web. 07 May. 2024.
Lots of Essays, "Capital Budgeting Simulation
Summary of Financi.," LotsofEssays.com, https://www.lotsofessays.com/viewpaper/1705713.html (accessed May 07, 2024)