The IRR method can produce multiple rates of return if the cash ﬂows are nonconventional.

Question

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The IRR method can produce multiple rates of return if the cash flows are nonconventional, meaning the cash flows have more than one change in sign (positive to negative or vice versa). In such situations, there may be multiple discount rates that make the net present value of the cash flows equal to zero, resulting in multiple IRRs.

The IRR Method Can Produce Multiple Rates of Return If