Question

Under certain conditions, a project may have more than one IRR. One such condition is when, in addition to the initial investment at time = 0, a negative cash flow (or cost) occurs at the end of the project's life.

A. True
B. False

Answer 1

Answer: true --A

Step-by-step explanation:

The Internal Rate of Return (IRR) is the expected internal annual rate of return projected to be earned on an investment by providing the discount rate that makes the value of future cash flows whether positive or negative over the entire period of an investment of a project to be equal to zero or value which is equal to investment.

A Negative IRR will occur when the total amount of cash flows caused by an investment becomes less than the amount of the initial investment which can be as result of some conditions such as inflation therefore the statement that Under certain conditions, a project may have more than one IRR. One such condition is when, in addition to the initial investment at time = 0, a negative cash flow (or cost) occurs at the end of the project's life is true

Answer 2

Answer: A. True

Explanation: It is true that that under certain conditions, a project may have more than one IRR. One of this such condition is when, in addition to the initial investment at time = 0, a negative cash flow (or cost) occurs at the end of the project's life.

Internal Rate of Return (IRR) is use to measure the attractiveness of an investment or a business project. IRR is the interest rate at the net present value of all cash flow both positive and negative from an investment which is equal to zero.