Computing the internal rate of return


Computing the Internal Rate of Return for a given set of cash flows, especially when the final cash flow is negative, occasionally results in two Internal Rates of Return. When this happens the best course of action is to:

A. Use the smaller of the two Internal Rates of Return.

B. Do not try to interpret the results because they are meaningless.

C. Use the larger of the two Internal Rates of Return.

D. Use the average of the two Internal Rates of Return.

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Accounting Basics: Computing the internal rate of return
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