Which of the following statements is CORRECT?
A) Projects with "normal" cash flows can have two or more real IRRs.
B) Projects with "normal" cash flows must have two changes in the sign of the cash flows, e.g., from negative to positive to negative. If there are more than two sign changes, then the cash flow stream is "nonnormal."
C) The "multiple IRR problem" can arise if a project's cash flows are "normal."
D) Projects with "nonnormal" cash flows are almost never encountered in the real world.
E) Projects with "normal" cash flows can have only one real IRR.

Question

Quizplus · Accepted Answer

Projects with "normal" cash flows, which have only one change in the sign of cash flows (from negative to positive), typically have only one real IRR.

Which of the Following Statements Is CORRECT