When IRR Fails: The Case of Delayed Investments

This video discusses how and why the IRR decision rule cannot be trusted when evaluating a project involving a delayed investment. This is because the IRR is only guaranteed to work when all of a project's negative cash flows occur before the project's positive cash flows. A comprehensive example is provided to illustrate how, in the case of a delayed investment (a positive cash flow upfront followed by a stream of negative cash flows), IRR can incorrectly suggest that a project be accepted when the NPV decision rule states that the project be rejected (of course, the reverse is possible as well; IRR can incorrect suggest to reject a project when NPV says to accept).-
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[@vivilin4571]

Thank you for stating the exception rule for IRR

[@chickenorthedickhead]

Very valuable. Thank you!

[@yoshionimusha2636]

ありがとうございました！