کد مقاله کد نشریه سال انتشار مقاله انگلیسی نسخه تمام متن
1014539 939382 2008 9 صفحه PDF دانلود رایگان
عنوان انگلیسی مقاله ISI
MIRR: A better measure
موضوعات مرتبط
علوم انسانی و اجتماعی مدیریت، کسب و کار و حسابداری کسب و کار و مدیریت بین المللی
پیش نمایش صفحه اول مقاله
MIRR: A better measure
چکیده انگلیسی

Over the past 60 years Net Present Value (NPV) and the Internal Rate of Return (IRR) have emerged from obscurity to become the overwhelming choices for the quantitative measurement of investment attractiveness in modern corporations. Despite their current popularity, neither NPV nor IRR was designed to deal effectively with the vast majority of investment problems, meaning those where periodic free cash flows are generated between the time of asset purchase and the time of sale. NPV assumes that periodic cash flows can and will be reinvested at the NPV discount rate, either at the cost of capital or another risk adjusted discount rate; IRR assumes reinvestment at the IRR. Neither assumption is usually realistic. In addition, when evaluating projects in terms of their financial attractiveness, the two measures may rank projects differently. This becomes important when capital budgets are limited. Finally, a project may have several IRRs if cash flows go from negative to positive more than once. The Modified Internal Rate of Return (MIRR), discovered in the 18th century, does account for these cash flows. This article explains the problems with NPV and IRR, describes how MIRR works, and demonstrates how MIRR deals with weaknesses in NPV and IRR.

ناشر
Database: Elsevier - ScienceDirect (ساینس دایرکت)
Journal: Business Horizons - Volume 51, Issue 4, July–August 2008, Pages 321–329
نویسندگان
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