The key issue here is that sign investments have multiple IRRs. The IRR is where the net present value is equal to zero. You can see from the chart that this investment has two places where the line crosses the axis and the NPV is equal to zero. It was actually to cart the philosopher who established a maximum number of IRRs is equal to the number of times the signs change in the cash flows. In this situation, the cash flows change sign twice, so the maximum number of IRRs will be two. A simple sum of the cash flows shows that equal minus 10 low discount rates. The large negative cash flow in the final year is so far out that its present value is relatively small, so the interim positive cash inflows outweigh its influence at high discount rates. The positive cash inflows are reduced so much they don't outweigh the large initial investment and the final year negative cash flow. But somewhere between the two, you can see that the final year cash outflow is reduced sufficiently so that the present value of the cash inflows outweigh the present value of the cash outflows. Derivative structures and investments with closeout or shutdown costs can have multiple IRRs, which is yet another reason that IRRs are problematic.