This is the original zero-sum cash flow:
This zero-sum cash certainly has some investment merit ? it is like borrowing money at zero interest.
I am also fully aware of the issue of multiple IRR but, certainly, it is not the case here. We need a better way of explaining it.
Look at this cash flow:
Look at the NPV profile of this cash flow:
No look at the NPV-Discount rate graph:
Definitely, this cash flow has two IRRs.
Let now calculate the NPV of the original zero-sum cash flow at various discount rates:
And look at the NPV-Discount rate graph:
NPV increases with increase in the discount rate. Certainly, the calculation has some issues due to the multiple sign change in the cash flow.
If I do a manual calculation I get exactly same result as using the XNPV formula:
However, my point is that this zero-sum cash flow certainly has some investment merit ? it is like borrowing money at zero interest.