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  • 标题:ASSESSMENT OF THE EFFICIENCY OF INVESTMENTS USING THE INTERNAL RATE OF RETURN AND THE PROFITABILITY INDEX
  • 本地全文:下载
  • 作者:Diaconu, Mihaela
  • 期刊名称:Theoretical and Applied Economics
  • 印刷版ISSN:1841-8678
  • 电子版ISSN:1844-0029
  • 出版年度:2009
  • 卷号:12(541)(supplement)
  • 期号:12(541)(supplement)
  • 页码:509-516
  • 出版社:Asociatia Generala a Economistilor din Romania - AGER
  • 摘要:Despite their shortcomings, the IRR and PI methods continue to be a widely employed evaluation techniques in capital budgeting. However, the internal rate of return (IRR) is often associated with a problem related to the fact that this technique assumes that the cash flows can be reinvested at the IRR instead of the more appropriate discount rate. This is often associated with leading to a project-ranking problem between the IRR and the net present value (NPV). An attempt to correct the flaws associated with the IRR has been made via the creation of a modified internal rate of return (MIRR). In this paper, we show an alternative for MIRR calculation that offers the same project-ranking resulted by using VAN. Furthermore, we use the reasoning developed for modified profitability index (IPM) calculation, a useful indicator for investment selection of different sizes that offers, also, compatibility with VAN criteria.
  • 关键词:investments; profitability index; cost/benefit ratio; net present value; internal rate of return.
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