Which of the following statements is CORRECT?
A) For a project to have more than one IRR, then both IRRs must be greater than the WACC.
B) If two projects are mutually exclusive, then they are likely to have
C) If a project is independent, then it cannot have
D)Multiple IRRs can only occur if the signs of the cash flows change more than once.
E) If a project has two IRRs, then the smaller one is the one that is most relevant, and it should be accepted and relied upon.

Question

Quizplus · Accepted Answer

Multiple IRRs can occur if the cash flows change signs more than once. This can lead to confusion and difficulties in decision making. Therefore, analysts should avoid using IRR as a standalone tool and consider other metrics such as net present value (NPV) to make informed decisions.

Which of the Following Statements Is CORRECT