When several sign reversals in the cash flow stream occur,a project can have more than one IRR.

Question

Quizplus · Accepted Answer

A project can have multiple IRRs when there are sign reversals in the cash flow stream. This is because the IRR calculation assumes a single discount rate that makes the net present value of the cash flows equal to zero. When there are several sign reversals, more than one discount rate can satisfy this condition, resulting in multiple IRRs.

When Several Sign Reversals in the Cash Flow Stream Occur,a