The Problem of Multiple IRRs Can Occur When

question 7

Multiple Choice

The problem of multiple IRRs can occur when:

• A)there is only one sign change in the cash flows.
• B)the first cash flow is always positive.
• C)the cash flows decline over the life of the project.
• D)there is more than one sign change in the cash flows.
• E)None of the above.

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Definitions:

Investor's Share

The portion of profits or losses attributed to an investor, based on their ownership percentage in an investment.

Other-Than-Temporary

A classification for a decline in the value of an investment or asset when the loss is not expected to be recovered in the short term, often requiring the asset to be written down to its reduced value permanently.

Unrealized Losses

Losses that result from holding on to an asset that has decreased in price but has not yet been sold by the owner.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all revenues, expenses, gains, and losses.