in this case, there might be more than one IRR where the NPV is zero. The IRR decision rules that stated the project would accepted if the cost of capital is less than IRR is seem to be misleading because the project should only be accepted if the cost of capital is between IRR1 and IRR2.The NPV approach avoids this problem quite simply. By using the cost of capital as the discount ratein the NPV formula, a negative NPV is generated if cost of capital is less than IRR1, a positive NPV is obtained if cost of capital is between IRR1 and IRR2, and the NPV is negative again if cost of capital is
greater than IRR2.This cause the board might vote ‘yes’ on the 7E7, when the cost of capital estimate is greater than the IRR and vote ‘no’ when the cost of capital is less than the IRR.