Which of the Following Is a Major Problem with the IRR

question 29

Multiple Choice

Which of the following is a major problem with the IRR method of capital budgeting?

• A)The IRR cutoff interest rate is arbitrary.
• B)The IRR is denominated as an interest rate.
• C)For projects with typical cash flows the IRR method agrees with the NPV accept/reject decision.
• D)A mix of positive and negative cash flows may result in multiple IRRs.