QUESTION 16 0.25 points Save Answer Which of the following statements is CORRECT

Question

QUESTION 16 0.25 points Save Answer Which of the following statements is CORRECT? OA Projects with "normal" cash flows can have only one real IRR OB. Projects with "normal" cash flows can have two or more real IRRs Oc. 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 "nonnorma." OD The "multiple IRR problem" can arise if a project's cash flows are normal" OE.Projects with "nonnormal" cash flows are almost never encountered in the real world.

Explanation / Answer

A project with normal cash flow have always one IRR. A normal cash flow is type of cash flow in which only cash outflow at begining of project and for remining life of project company get cash inflow.

A nonnormal cash flow are type of cash flow in which there are multiple cash outrflow and cash inlflow. A nonnormal cash flows have always more than one IRR.

So, option (A) is correct answer.

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