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How does the issue of multiple IRRs arise? How is it dealt with? a. Multiple IRRs arise due to irregular cash-flows. Profitability index can be
How does the issue of multiple IRRs arise? How is it dealt with? a. Multiple IRRs arise due to irregular cash-flows. Profitability index can be used to correct for this issue by backing out the discount rate. b. Because having less than one is depressing. c. Multiple IRRs is the normal situation, single IRRs are abnormal. Using Payback period method can help you determine which IRR is d. When cash-flows are irregular, multiple IRRs arise because cash-flows may move over the O NPV line more than once (Creating multiple roots). You must guess one of the IRRs to be correct-or revert to NPV correct
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