Internal Rate of Return
Pitfall 2 - Multiple Rates of Return
w Certain cash flows can generate NPV=0 at two
different discount rates.
w The following cash flow generates NPV=0 at both
(-50%) and 15.2%.1 , 000 800 150 150 150 150 150
0 1 2 3 4 5 6
− + + + + + −
C C C C C C C