The number of internal rates of return is:
A)not affected by the magnitude of cash flows.
B)not limited to the number of sign reversals in the cash flow stream.
C)limited to the number of sign reversals in the cash flow stream.
D)limited by the life of the investment.

Question

Quizplus · Accepted Answer

The number of internal rates of return is limited by the number of sign reversals in the cash flow stream. This is because each sign reversal potentially indicates a change from positive to negative cash flow (or vice versa), which can result in a different internal rate of return calculation.

The Number of Internal Rates of Return Is