Question 6.ST.6: Explain how NPV and IRR deal with non-conventional cash flow...
Explain how NPV and IRR deal with non-conventional cash flows.
If an investment project has positive and negative cash flows in successive periods (non conventional cash flows), it may have more than one internal rate of return. This may result in incorrect decisions being taken if the IRR decision rule is applied. The NPV method has no difficulty in accommodating non-conventional cash flows.
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