Which of these statements about internal rate of return analysis is BEST?
A)If the IRR is less than the company's required rate of return,the project is worth funding.
B)Projects having lower IRR are generally superior to those having higher IRR.
C)IRR and NPV calculations always make the same investment recommendations.
D)If net outflows follow a period of net inflows,IRR may give conflicting results.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) method can indeed give conflicting or multiple results when a project's cash flow pattern includes net outflows after an initial period of net inflows, due to the mathematical nature of the IRR calculation. This situation can lead to the project having more than one IRR, making the analysis more complex.

Which of These Statements About Internal Rate of Return Analysis