Capital Budgeting. When is it likely that a project might produce multiple inter

ID: 2723562 • Letter: C

Question

Capital Budgeting. When is it likely that a project might produce multiple internal rate of return (IRR)?

AWhen the project is mutually exclusive with another project

When the project's cash flows switch signs more than once

When the initial cash flow of the project is has a positive sign

When the first set of cash flows are larger than subsequent cash flows

When projects have unequal lives

AWhen the project is mutually exclusive with another project

When the project's cash flows switch signs more than once

When the initial cash flow of the project is has a positive sign

When the first set of cash flows are larger than subsequent cash flows

When projects have unequal lives

When the project's cash flows switch signs more than once

When cash flows of a project change sign more than once, there will be multiple IRRs; in these cases NPV is the preferred measure.

When the project's cash flows switch signs more than once

When cash flows of a project change sign more than once, there will be multiple IRRs; in these cases NPV is the preferred measure.

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