
A decision rule and associated methodology for converting the NPV statistic into a rate-based metric is referred to as

Multiple Choice

NPV.

profitability index.

MIRR.

discounted payback.

The decision rule and associated methodology for converting the NPV (Net Present Value) statistic into a rate-based metric is referred to as the **MIRR (Modified Internal Rate of Return)**.

**Explanation:**
- **MIRR (Modified Internal Rate of Return):** MIRR is a rate-based metric that addresses some of the limitations of the traditional Internal Rate of Return (IRR). Unlike IRR, which can give multiple rates of return in cases with non-normal cash flows, MIRR provides a single, more reliable rate of return by assuming reinvestment at the project's cost of capital rather than the IRR.

### Conclusion:
The correct answer is **MIRR**.

Would you like more details on any of these concepts or have any additional questions?

Here are 5 relative questions to expand on this topic:
1. How does MIRR differ from traditional IRR?
2. What are the advantages of using MIRR over NPV?
3. How is MIRR calculated in practice?
4. Why might a firm prefer MIRR over the profitability index when comparing projects?
5. What limitations might MIRR still have despite being more reliable than IRR?

**Tip:** MIRR is particularly useful for comparing projects with different scales or durations, as it provides a clearer picture of profitability by considering the cost of capital and reinvestment rate.

Explore how to convert Net Present Value (NPV) into a rate-based metric using Modified Internal Rate of Return (MIRR). Learn about the advantages of MIRR over other metrics like profitability index, and how MIRR addresses the limitations of traditional Internal Rate of Return (IRR).

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