A problem with calculating the internal rate of return is that it relies on the estimation of future cash flows, which can be inaccurate, thus making the IRR less reliable.

Question

Quizplus · Accepted Answer

The statement is true. The accuracy of the IRR calculation depends heavily on the accuracy of the projected future cash flows. Any errors or inaccuracies in these projections can result in an unreliable IRR calculation.

A Problem with Calculating the Internal Rate of Return Is