Internal rate of return (IRR)cannot be reliably be used to choose between mutually exclusive projects.

Name: Internal rate of return (IRR)cannot be reliably be used to choose between mutually exclusive projects.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

IRR relies on the assumption that cash flows can be reinvested at the same rate, which may not be the case for mutually exclusive projects with different cash flow patterns. Other methods such as net present value or profitability index should be used in such cases.

Internal Rate of Return (IRR)cannot Be Reliably Be Used to Choose