Project with no IRR may be actually a profitable project ?

[thrustmaster99]

Hi All,
I didn’t understand the following statement in Corporate Finance’s Capital Budgeting chapter.
It says, “Project with no irr can actually be a profitable project”.
How can that be possible ? Explanation with an e.g would be appreciated.
Thanks

 

[S2000magician]

Suppose that you have a project with these cash flows:
Year 1: $200,000
Year 2: -$600,000
Year 3: $500,000
It’s a profitable project - if your discount rate is 0% the NPV is $100,000; if your discount rate is 10% the NPV is $67,769 - but there is no IRR.
This is one of the reasons that MIRR is preferred to IRR.