If the sign of the cash flows for a project changes two times, then the project likely has
A)one IRR.
B)two IRRs.
C)three IRRs.
D)four IRRs.

Question

Quizplus · Accepted Answer

If the sign of cash flows changes two times, then the project will have two IRRs. This is because the IRR is the discount rate at which the net present value (NPV) of the cash flows equals zero. If the sign changes twice, there will be two discount rates that make the NPV zero, resulting in two IRRs.

If the Sign of the Cash Flows for a Project