The possibility that more than one discount rate will make the NPV of an investment zero is called the ___________ problem.
A) Net present value proﬁling.
B) Operational ambiguity.
C) Mutually exclusive investment decisions.
D) Issues of scale.
E) Multiple rates of return.

Question

Quizplus · Accepted Answer

The possibility that more than one discount rate will make the NPV of an investment zero is referred to as the multiple rates of return problem. This problem can arise in situations where there are irregular cash flows or investments with different time horizons. Therefore, option E is the correct choice.

The Possibility That More Than One Discount Rate Will Make