A project will have only one internal rate of return if
A)the net present value is positive.
B)the net present value is negative.
C)the cash flows decline over the life of the project.
D)there is a one-sign change in the cash flows.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is unique or there is only one IRR if there is exactly one sign change in the cash flows of a project (from negative to positive or vice versa), which typically happens when an initial investment (negative cash flow) is followed by a series of positive cash flows. Multiple IRRs can occur when there are multiple sign changes in the cash flow sequence.

A Project Will Have Only One Internal Rate of Return