Which of the statements below is TRUE?
A) A problem with IRR as a decision rule is that if the cash flow is not standard, there is a possibility of multiple IRRs for a single project.
B) When we talk about standard cash flow for a project, we assume an initial cash outflow at the beginning of the project and negative cash flows in the future.
C) When we apply IRR to standard cash flow, we have the potential for more than one IRR solution.
D) For every period that the cash flow has a change of sign (negative to positive or positive to negative), the NPV profile could cross the y-axis, generating a MIRR.

Question

Quizplus · Accepted Answer

The IRR (Internal Rate of Return) can indeed have multiple values if the cash flow pattern is non-standard, meaning it changes signs more than once. This can lead to multiple IRRs for a single project.

Which of the Statements Below Is TRUE