Multiple IRRs This problem is useful for testing the ability of financial calculators and computer software. Consider the following cash flows. How many different IRRs are there? (Hint: Search between 20 per cent and 70 per cent.) When should we take this project?

Year Project Million Project Billion 0 −£1,500 −£I0 1 I0 + 200 I0 + 500 2 1,200 1,500 3 1,500 2,000 The expected rate of return for either of the two projects is 12 per cent. What is the range of initial investment (I0) for which Project Billion is more financially attractive than Project Million?