There exists an internal rate of return (IRR) solution for each time the direction of cash flows associated with a project is interrupted, that is, each time outflows change to inflows.

Question

Quizplus · Accepted Answer

The statement is true. The IRR is the discount rate that makes the net present value (NPV) of an investment equal to zero. When the direction of cash flows associated with a project changes, there is a possibility that the IRR solution changes. Therefore, there is an IRR solution for each time the outflows change to inflows or vice versa.

There Exists an Internal Rate of Return (IRR) Solution for Each