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I have another question, thanks for your help.
In the Aptitude 2 test there was one Q which had the following answer: “The IRR cannot be used to assess projects that don’t have an IRR”
This got me thinking – which kind of projects don’t have an IRR?
sorry , it might be an obvious answer but my brain cannot compute it
That’s a good question
Projects with irregular cashflows may not have an IRR or may have multiple IRRs- eg if there is no initial outlay- or possibly no returns.
Some projects may consist of all costs and possibly the benefits of the project can’t be quantified in cash flow terms. These projects would have all negative cashflows -so NPV here could never equal zero so would not be possible to calculate an IRR for these.
Hope that helps