AppliedMultiple choice
A project’s cash flows go negative, positive, then negative again (for example a clean-up cost at the end). What problem can this cause for IRR?
- AIRR becomes exactly zero whenever the final cash flow is negative
- BThere can be more than one IRR, or none
- CIRR always exceeds the cost of capital when any cash flow is negative
- DIRR can no longer be computed because the NPV function becomes discontinuous in the rate
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