The Internal Rate of Return Is Unreliable as an Indicator

question 28

Multiple Choice

The internal rate of return is unreliable as an indicator of whether or not an investment should be accepted given which one of the following?

• A)One of the time periods within the investment period has a cash flow equal to zero.
• B)The initial cash flow is negative.
• C)The investment has cash inflows that occur after the required payback period.
• D)The investment is mutually exclusive with another investment of a different size.
• E)The cash flows are conventional.

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