Which of the Following Cash Flow Patterns Would Produce Multiple

question 43

Multiple Choice

Which of the following cash flow patterns would produce multiple internal rates of return (IRRs) for a project?

• A)A project requires cash payments for the first three years of its life, followed by cash inflows for the remainder of its life.
• B)A project requires a large cash payment today, but it generates cash inflows every year after it is purchased.
• C)A project requires cash payments for its entire life.
• D)A project requires a large cash payment today, it generates cash inflows for the next four years, a large cash payment must be paid in Year 5, and then cash inflows are generated for the remainder of the project's life.
• E)A project with a five-year life requires no cash outlay today, it generates cash inflows for the next three years, and then requires cash payments for the last two years.

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