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IRR and undiscounted cash flows

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › IRR and undiscounted cash flows

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  • September 17, 2025 at 4:11 pm #720046
    Anantx07
    Participant
    • Topics: 1
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    • ☆

    A company is considering a two-year project, which has two annual
    internal rates of return, namely 10% and 25%. The sum of the
    undiscounted cash flows is positive.
    The project will necessarily have a positive net present value,
    when the annual cost of capital is
    A More than 25%
    B More than 10%
    C Between 10% and 25%
    D Less than 25%

    I was not able to understand this question at all.
    Can you please explain this question

    September 17, 2025 at 4:14 pm #720047
    Anantx07
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Here is the solution as well i was not able to understand the solution as well:

    Answer A
    The graph would be U-shaped with a negative NPV between 10% and
    25% and positive NPVs at less than 10% or more than 25%.

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