{"id":45152,"date":"2024-04-15T21:53:58","date_gmt":"2024-04-15T21:53:58","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=45152"},"modified":"2024-04-15T21:53:58","modified_gmt":"2024-04-15T21:53:58","slug":"in-capital-budgeting-number-of-non-normal-cash-flows-have-internal-rate-of-returns-are","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-capital-budgeting-number-of-non-normal-cash-flows-have-internal-rate-of-returns-are\/","title":{"rendered":"In capital budgeting, number of non-normal cash flows have internal rate of returns are"},"content":{"rendered":"

[amp_mcq option1=”one” option2=”multiple” option3=”accepted” option4=”non-accepted” correct=”option2″]<\/p>\n

The correct answer is B. multiple.<\/p>\n

A non-normal cash flow is a cash flow that does not have the same amount of cash flow in each period. For example, a project might have a large initial investment, followed by a series of positive cash flows. This type of cash flow can have multiple internal rates of return (IRRs).<\/p>\n

The IRR is the rate of return that makes the present value of the cash flows equal to zero. To find the IRR, you can use a financial calculator or a spreadsheet.<\/p>\n

If a project has multiple IRRs, it is usually not a good investment. This is because the IRRs are not unique, and there is no way to know which one is the correct one.<\/p>\n

If you are considering a project with multiple IRRs, you should use another method to evaluate it, such as the net present value (NPV). The NPV is the sum of the present values of the cash flows. A project with a positive NPV is a good investment.<\/p>\n

Here is a brief explanation of each option:<\/p>\n