In investment appraisal A situation may arise where there may be two IRRs instead of one. What is this situation?

When cash flows of an Investment change sign more than once, there will be multiple IRRs; in these cases NPV is the preferred measure.

·         In the case of positive cash flows followed by negative ones and then by positive ones, the IRR may have multiple values.

·         It has been shown that with multiple internal rates of return, the IRR approach can still be interpreted in a way that is consistent with the present value approach provided that the underlying investment stream is correctly identified as net investment or net borrowing.

·         NPV remains the "more accurate" reflection of value to the business. IRR, as a measure of investment efficiency may give better insights in capital constrained situations. However, when comparing mutually exclusive projects, NPV is the appropriate measure.

More than one rate of return from the same project that make the net present value of the project equal to zero. This situation arises when the IRR method is used for a project in which negative cash flows follow positive cash flows. For each sign change in the cash flows, there is a different rate of return.

A situation in which the internal rate of return for a project has more than one value. The internal rate of return is the present value ofcash flows that will result in a project breaking even; multiple rates of return occur when one calculates cash inflows and cash outlows in the internal rate of return.

In the case of positive cash flows followed by negative ones and then by positive ones, the IRR may have multiple values

The best solution to project that have multiple IRR is to calculate MIRR..... If project have +ve cash flow followed by -ve cash flow and vice versa,this is situation where project has two IRR

The IRR is the discount rate at which the NPV for a project equals zero. This rate means that the present value of the cash inflows for the project would equal the present value of its outflows.

· The IRR is the break-even discount rate

In the case of there is two Internal rate of return  may acure a multiple value.

it is the shorfall of conventional IRR, which can be Resulted due to cash outflows at other then period1, this will casue the liner table to give no IRR or multiple IRR.