A significant disadvantage of the internal rate of return is that it

Question

Quizplus · Accepted Answer

The internal rate of return can result in multiple rates of return (more than one IRR) in cases where there are non-conventional cash flows, making it difficult to interpret results. Option A is incorrect because IRR does consider the time value of money. Option B is incorrect because all cash flows are given equal weight. Option D is incorrect because expressing the IRR as a percentage is a standard practice in financial analysis.

A Significant Disadvantage of the Internal Rate of Return Is