Which of the following situations can lead to IRR giving a different decision than NPV?
A)Delayed investment
B)Multiple IRRs
C)Differences in project scale
D)All of the above can lead to IRR giving a different decision than NPV

Question

Quizplus · Accepted Answer

All of the above situations can lead to IRR giving a different decision than NPV.

Delayed investment can impact the timing of cash flows, leading to different IRR and NPV values.

Multiple IRRs can occur when there are multiple changes in the direction of cash flows, making it difficult to determine which rate to use. This can result in conflicting decisions between IRR and NPV.

Differences in project scale such as differences in size, duration, and risk can lead to different IRR and NPV values. NPV is more reliable in such situations as it considers the size of the investment and the time value of money.

Which of the Following Situations Can Lead to IRR Giving