题目解释:一项资本投资有如下数据,投资的NPV接近25000,internal rate of return 为 - 29%,下面哪一项说法是正确的?

考点:IRR   关键词:minus

解题思路:因为在初始投资之后有流出现金流,所以IRR的计算有两个

The IRR calculation assumes that the cash inflows from the project can be reinvested at the Internal Rate of Return, not the company's cost of capital.
The IRR is the discount rate at which the NPV of an investment will be equal to 0. This is the discount rate at which the present value of the expected cash inflows from a project equals the present value of the expected cash outflows. Whenever a project has a negative cash flow or flows in any subsequent year(s) after Year 0, it can have more than one IRR, because more than one discount rate will cause the project’s NPV to be zero. The number of IRRs will be equal to the number of sign changes in the cash flows. Furthermore, one or more of the IRRs will frequently be negative. That is obviously what has occurred here. The project has a negative cash flow in Year 4. Therefore, the project will have two IRRs: one due to the normal sign change from negative in Year 0 to positive in Year 1, and one due to the sign change from positive in Year 3 to negative in Year 4.
The IRR is the discount rate at which the NPV of an investment will be equal to 0. This is the discount rate at which the present value of the expected cash inflows from a project equals the present value of the expected cash outflows. The error occurred in submitting the negative IRR to the board. Whenever a project has a negative cash flow or flows in any subsequent year(s) after Year 0, it can have more than one IRR, because more than one discount rate will cause the project’s NPV to be zero. The Financial Analysis Department should have determined what the correct (positive) IRR was before submitting anything to the board.
Whether or not the board of directors should approve the project depends upon a great many factors. That is a judgment that cannot be made on the basis of the limited facts given.