Customer Service Chat
Get quote & make Payment
Internal rate of return irr, finance, Other Engineering
Internal rate of return IRR
In case of IRR method cash flow are analyzed taking into account the magnitude and the timing. IRR is that discount rate which gives a net present value equal to zero. The IRR method will also give the same decision as the NPV method in case of non-mutually exclusive projects. In case of independent projects one with highest IRR will be accepted (Robert Parrino & David s. Kidwell, 2009).
Where r= Internal Rate of Return
K=opportunity cost of capital.
Merits of IRR:
• Like NPV method, IRR methods also consider time value of money.
• All cash flow are taken to calculate rate of return
• Shareholders wealth maximinsation objectives given importance.
Demerits of IRR:
• Given misleading and inconsistent result when the NPV does not decline with the discount rate.
• Difficulty in making decision when mutually exclusive project exists
• IRR method fails to give an actual exists annual profitability of an investment.
• IRR method makes in realistic assumption that interim positive cash flow are reinvested at the same rate of return.
• More than one IRR exists for projects with alternative cash flow this leads to confusion and ambiguity (I.M. Pandey, 2005).
Posted Date: 2/6/2012 10:34:36 PM | Location : United States
Ask an Expert
Internal rate of return irr, finance, Assignment Help, Ask Question on Internal rate of return irr, finance, Get Answer, Expert's Help, Internal rate of return irr, finance Discussions
Write discussion on Internal rate of return irr, finance
Your posts are moderated
Write your message here..
Aviation legislation - permit to fly, PERMIT TO FLY A Permit to Fly may...
PERMIT TO FLY A Permit to Fly may be issued to an aircraft that does not, for a variety of reasons, fully comply for a Certificate of Airworthiness. These reasons might be b
Aeroengine - velocity trinagle, If radial velocity is neglected, for a stat...
If radial velocity is neglected, for a stat or there is no change from the cascade analysis. For a rotor this vectorial For a rotor this vectorial addition gives rise to graphical
Spinning reticle seekers , Spinning Reticle Seekers A spinning reti...
Spinning Reticle Seekers A spinning reticle seeker contains a single thermal detector and a spinning patterned disk - such as the ‘Rising Sun' Reticle. - consis
Acfi385, Seven years ago, after 15 years in public accounting, Stanley Book...
Seven years ago, after 15 years in public accounting, Stanley Booker, CPA, resigned his posiition as Manager of Cost Systems for Davis, Cohen, and O''Brien Public Accountants and s
Zeroth law of thermodymanics, Explain with the aid of sketch of zeroth law ...
Explain with the aid of sketch of zeroth law of thermodynamics
Biology, Any Biology Modeling software?
Any Biology Modeling software?
Electrical de-icing system maintenance, ELECTRICAL DE-ICING SYSTEM MAINTENA...
ELECTRICAL DE-ICING SYSTEM MAINTENANCE: Tests of the system must be carried out when the servicing schedule required it or when a component has been replaced. Typical tests ar
Microprocessor, software development cycle for 8086
software development cycle for 8086
Embedded system, vx woks is areal time operating system or not
vx woks is areal time operating system or not
Engineering physics, Consider a conical pendulum with a bob of mass m=80kg ...
Consider a conical pendulum with a bob of mass m=80kg on a string of length L=10 m that makes an angle of 5 deg. with the vertical. Determine the horizontal and vertical component
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.