is this question right ??? multiple, question, following

hw0799

Which of the following cash flow streams is most likely to have multiple IRRs?

Purchase Price Cash Flow 1 Cash Flow 2



A) $1.0 million $1.0 million gain $0.1 million expense


B) $1.8 million $10 million gain $9 million expense


C) $1.7 million $8.0 million gain $5 million gain



Your answer: C was incorrect. The correct answer was B) $1.8 million $10 million gain $9 million expense

When there is a reversal in the sign of the cash flows, it is likely that there will be multiple IRR solutions. In fact, for the cash flow stream {-1.8; 10; -9} the IRRs are 13 and 343%.