Question

What is a drawback of the Internal Rate of Return (IRR) when cash flows are non-conventional?

a.

IRR leads to multiple rates of return

b.

IRR cannot be used effectively

c.

IRR fails to consider the time value of money

d.

IRR cannot distinguish between lending and borrowing

Answer: (a).IRR leads to multiple rates of return Explanation:When cash flows are non-conventional, IRR may lead to multiple rates of return, which is a drawback of the method.

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Q. What is a drawback of the Internal Rate of Return (IRR) when cash flows are non-conventional?

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