A project can have as many different internal rates of return as it has:
A) cash inflows.
B) cash outflows.
C) periods of cash flow.
D) changes in the sign of the cash flows.

Question

Quizplus · Accepted Answer

A project can have multiple internal rates of return (IRR) when there are changes in the sign of the cash flows. This happens when the project generates negative cash flows during its life and then a large positive cash flow at the end. In such cases, the IRR calculation may give multiple values, and it becomes difficult to interpret the results. Therefore, the IRR is not always the best metric to use for making investment decisions.

A Project Can Have as Many Different Internal Rates of Return