Which statement regarding normal cash flows is correct?
A)If a project has normal cash flows, then its IRR must be positive.
B)If a project has normal cash flows, then its MIRR must be positive.
C)If a project has normal cash flows, then it will have exactly two real IRRs.
D)If a project has normal cash flows, then it can have only one real IRR, whereas a project with non-normal cash flows might have more than one real IRR.

Question

Quizplus · Accepted Answer

Normal cash flows involve an initial outlay followed by a series of positive cash inflows, which means the project can have only one real IRR. Non-normal cash flows, which involve sign changes in the cash flow stream more than once, can result in multiple IRRs.

Which Statement Regarding Normal Cash Flows Is Correct