Under certain conditions, a particular project may have more than one IRR. One condition under which this situation can occur is if, in addition to the initial investment at time = 0, a negative cash flow occurs at the end of the project's life.

Question

Quizplus · Accepted Answer

This is known as the "non-normal" or "multiple IRR" problem, and it occurs when cash flows reverse signs more than once throughout the life of the project. This can result in multiple IRRs, making it difficult to determine the true rate of return.

Under Certain Conditions, a Particular Project May Have More Than