IRR

Hi John,

I’m sorry to bother you again 🙁
I was just doing the mock exam on your website, and I have a query regarding the following question:

Which of the following statements is/are NOT a weakness of the IRR?
Options are:
(1) it ignores the time value for money
(2) there can be several IRRs for the same investment
(3) it is dependent on the cost of capital for the company
(4) it cannot reliably be used as a basis for choosing between investments

I understand
(1) is not a weakness, it’s simply not true
(2) that’s not a weakness – correct answer
(3) is not a weakness, it’s simply not true
(4) here is my problem – (4) it’s correct, but I don’t understand why this is NOT a weakness??

Many thanks in advance!!
Jenny