Given a particular set of project cash flows,which of the following statements is correct?
A) There can be only one NPV for the project, even with multiple discount rates.
B) There can be only one IRR for the project.
C) There can be more than one IRR for the project.
D)There can be only one profitability index for the project, even with multiple discount rates

Question

Quizplus · Accepted Answer

It is possible for a project to have multiple IRRs if there are multiple changes in the sign of the cash flows. This is because the IRR calculation involves finding the discount rate that sets the NPV of the cash flows equal to zero, and if there are multiple changes in sign, there may be multiple discount rates that satisfy this condition. The other choices are incorrect because there can be multiple NPVs depending on the chosen discount rate (A), there can be multiple profitability indices (D), and while there can be multiple discount rates that result in the same NPV, there can only be one IRR (B) in most cases.

Given a Particular Set of Project Cash Flows,which of the Following