In which of the following cases is IRR unreliable? I. When looking at mutually exclusive projects II. For a project that has positive cash flow in Year 1, but negative cash flow in Year 2 Both Neither Only I Only II

In which of the following cases is IRR unreliable? I. When looking at mutually exclusive projects II. For a project that has positive cash flow in Year 1, but negative cash flow in Year 2 Both Neither Only I Only II

Name: In which of the following cases is IRR unreliable?I. When looking at
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Description: In which of the following cases is IRR unreliable?I. When looking at mutually exclusive projectsII. For a project that has positive cash flow in Year 1, but negative cash flow in Year 2BothNeitherOnly IOnly II

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section11.1: Identifying Relevant Cash Flows

Problem 3ST

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Questlon Completion Status: What are the cases in which the IRR and NPV might not give the same answer? In other words when is the IRR unreliable? i. Mutually Exclusive Projects ii. When the NPV is equal to 0 ii. Non-Conventional Cash Flows iv. Independent Projects Oi and ii only O ii and iv only Oi and ii only Oi, ii, and ii O all of the above QUESTION 13 Click Save and Submit to save and submit. Click Save All Answers to save all answers.
Which of the following statements is CORRECT? O Projects with "normal" cash flows can have two or more real IRRS. O Projects with "normal" cash flows must have two changes in the sign of the cash flows, e.g., from negative to positive to negative. If there are more than two sign changes, then the cash flow stream is "nonnormal." O The "multiple IRR problem" can arise if a project's cash flows are "normal." O Projects with "nonnormal" cash flows are almost never encountered in the real world. O Projects with "normal" cash flows can have only one real IRR.
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If we compare two mutually exclusive projects using __________ problems can arise if the projects' cash flows exhibit differences in ___________.
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