Projects can have multiple internal rates of return due to:

Question

Quizplus · Accepted Answer

Projects can have multiple internal rates of return when they have both positive and negative cash flows at different points during their life. It occurs when there is a change in the direction of cash flows, such as an initial investment followed by a period of positive cash flows and then a period of negative cash flows. This can lead to multiple solutions for the internal rate of return equation, resulting in multiple internal rates of return. A and B are incorrect because a project with all positive or negative cash flows will have only one internal rate of return. D is incorrect because the statement in the question requires a choice.

Projects Can Have Multiple Internal Rates of Return Due To