Question

The possibility that more than one discount rate can cause the net present value of an investment to equal zero is referred to as: Group of answer choices multiple rates of return. duplication. the dual dilemma. the AAR problem. the net present value profile.

Answer 1

Multiple rates of returns refer to the possibility that more than one discount rate will bring about the net present value of an investment.

It should be noted that multiple rates of returns from the same project brings about the net present value being equal to zero.

The situation occurs when the IRR method is utilized in a project where the negative cash flows follow the positive cash flows.

In conclusion, the correct option is multiple rates of returns.

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