Which of the following statements is CORRECT? a. If a project has two IRRs, then

Question

Which of the following statements is CORRECT?

a. If a project has two IRRs, then the smaller one is the one that is most relevant, and it should be accepted and relied upon.
b. Multiple IRRs can only occur if the signs of the cash flows change more than once.
c. If a project is independent, then it cannot have multiple IRRs.
d. For a project to have more than one IRR, then both IRRs must be greater than the WACC.
e. If two projects are mutually exclusive, then they are likely to have multiple IRRs.

Explanation / Answer

b. Multiple IRRs can only occur if the signs of the cash flows change more than once.

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