A problem with the internal rate of return method is that it:

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) method can have difficulty handling projects with unconventional cash flows, such as projects with multiple changes in the direction of cash flow (e.g., an initial investment followed by cash inflows, then additional outflows later in the project). This can lead to multiple IRRs or situations where the IRR cannot be easily determined, complicating the decision-making process.

A Problem with the Internal Rate of Return Method Is