The problem of multiple IRRs can occur when:
A) there is only one sign change in the cash flows.
B) the first cash flow is always positive.
C) the cash flows decline over the life of the project.
D) there is more than one sign change in the cash flows.
E) None of these.

Question

Quizplus · Accepted Answer

The problem of multiple IRRs occurs when there is more than one sign change in the cash flows. This can lead to multiple rates of return that make it difficult to determine which rate to use in evaluating the project. Options A and B do not necessarily result in multiple IRRs, while option C may still have a single IRR even if the cash flows decline over time.

The Problem of Multiple IRRs Can Occur When