CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

Multiple IRRs are likely to appear when the ______
A. cost of capital is less than the modified IRR, or the cash flows of a project are large in magnitude.
B. cost of capital equals the interest rate.
C. cash flows change direction several times during the life of a project.
Explanation: Multiple IRRs appear when cash flows are non-normal. Non-normal cash flows occur when negative net cash flows occur during some year after a project has been undertaken.

User Contributed Comments 1

User Comment
bekki multiple IRRs can occur for non conventional projects
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