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Under which of the following conditions would IRR lead to an erroneous or misleading result (choose the two most likely scenarios)? Check All That Apply

Under which of the following conditions would IRR lead to an erroneous or misleading result (choose the two most likely scenarios)?

Check All That Apply

  • The sign of the cash flows changes more than once

  • NPV is negative

  • Mutually exclusive projects

  • Cash Flow in Year 0 is negative

  • The payback period exceeds 3 years

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