the timing of the cashflows are different.

23.You are considering a safe investment opportunity that requires a $920 investment today, and will pay $690 two years from now and another $640 five years from now. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain.

No, because the timing of the cashflows are different.

Yes, you can always compare IRRs of riskless projects, and an investment in the back is riskless.

No, this is like comparing the IRR of two projects.

Yes, because the EAR is the same at all horizons, so the two “projects” have the same riskiness, scale, and timing.