Strip mines and nuclear plants often have multiple IRRs because of:
Avery low initial cost
Bconstant annual inflows
Can absence of any outflow
Da large outflow at project end
Answer & Solution
Correct answer: D. a large outflow at project end
A big closing cost after earlier inflows adds a second sign change, which allows several IRRs.
Keep practising Internal Rate of Return
Browse all Internal Rate of Return questions for CA Inter, or explore more Financial Management topics.
Related questions
The same return received later gives an IRR that is:If cash flows are random variables, as in a life annuity, IRR uses their:The AIRR approach of Magni was introduced to solve problems of:In personal finance the IRR measures what type of performance?With no capital constraint, which projects does a firm accept to maximize value?Mutually exclusive projects are those from which:The equivalent annuity method divides the NPV by what to annualize it?The equivalent annuity method is often used to compare projects of: