medium · CFA Level I corp
Ironvale Mining is evaluating a project with unconventional cash flows: an initial investment of $1,000, followed by a payoff of 2,500 in Year 1, and a mandatory site restoration cost of 1,560 in Year 2. If the NPV of the project is negative at the required rate of return, the IRR rule would most likely: Ironvale Mining is evaluating a project with unconventional cash flows: an initial investment of $1,000, followed by a payoff of 2,500 in Year 1, and a mandatory site restoration cost of 1,560 in Year 2.
- Be mathematically undefined.
- Be unreliable as a decision tool.
- Provide a consistent rejection signal.
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