Certain mathematical properties may cause a project with a nonconventional cash flow pattern to have multiple IRRs; this problem does not occur with the NPV approach.

Question

Quizplus · Accepted Answer

This statement is true. The occurrence of multiple IRRs is a known issue with nonconventional cash flow patterns, as there may be multiple discount rates that result in a zero net present value. However, the NPV approach only results in one discount rate that reflects the project's overall profitability.

Certain Mathematical Properties May Cause a Project with a Nonconventional