Discussion
A cash flow whose sign changes more than once may have
Answer: C
Correct answer: more than one internal rate of return
The present worth equation is a polynomial in the discount factor, and each sign change in the cash flow admits another possible positive root. A project requiring a large restoration outlay at the end - a mine or a nuclear plant - has two sign changes and may well have two rates at which the present worth is zero, neither of which means anything on its own.
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