The internal rate of return:
A) Is the best analytical method to use when comparing mutually exclusive projects.
B) Determines the discount rate which should be used to evaluate a project given current market conditions.
C) Will increase as the initial investment in a project is increased.
D) Is relatively diﬃcult to interpret and explain.
E) Method of analysis can result in multiple rates under certain conditions.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) method can result in multiple rates when there are non-conventional cash flows, such as alternating positive and negative cash flows.

The Internal Rate of Return