Internal rate of return irr, finance, Other Engineering

Internal rate of return irr, finance, Other Engineering

Assignment Help:

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).

Related Discussions:- Internal rate of return irr, finance

SYSTEMS ENGINEERING, i need 3 areasof application of lunear programming

i need 3 areasof application of lunear programming

Scintillation detector, what is scintillation detector

what is scintillation detector

Biomedical engineering assignment, I''ll attach assignment

I''ll attach assignment

Agricultural engineering , Agricultural engineering does not easily mean on...

Agricultural engineering does not easily mean only fruits and vegetables formed from the fields. Agriculture has come up with a dissimilar look now. When you open a paouch of chip

INSTRUMENTATION, TRANSDUCERS

TRANSDUCERS

.darlington pair, darlington pair assignment

darlington pair assignment

Principles of sprinkler systems-fire safety engineering, Principles of Spri...

Principles of Sprinkler Systems-Fire safety Engineering Sprinkler systems may be installed in a building to achieve a number of different objectives. Very often the primary r

Elctronics, hybrid pi model

hybrid pi model

Aaa, Let C(K) denote a European vanilla Call option with strike price K. As...

Let C(K) denote a European vanilla Call option with strike price K. Assume that all options are identical except for strike price, and strike prices satisfy (K1) What are the no-

Blasting, Students are to undertake a tunnel blast design for the following...

Students are to undertake a tunnel blast design for the following conditions: • Tunnel is 5.5m wide by 5.5.m high • Rock is a granite with a UCS of 300 MPa • Drill hole diameter is

Write Your Message!

Name

Email id

Message

Verfication Code

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd