期刊
COMPUTERS & CHEMICAL ENGINEERING
卷 106, 期 -, 页码 396-406出版社
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.compchemeng.2017.06.005
关键词
Internal rate of return; Hurdle rate; Profitability measure; Enterprise rate of return; Modified internal rate of return; Business risk
IRR, a widely used profitability measure, is the Discount Rate that yields Net Present Value (NPV)= 0 for a stream of positive and negative cash flows, at least one of each sign and with no explicit financing payments. A big disadvantage is lack of parameters, such as a project finance rate or the enterprise rate (ER), i.e., Return on Investment of the overarching investment group to serve as a measure of opportunity cost. The coupled metrics proposed earlier by the author NAV(project) and NPV%-do not suffer these disadvantages, so IRR is analyzed in terms of NPV%. Useful information can be obtained from a projection of IRR values onto the NPV%, ER plane revealing the sensitivity of IRR to risk under meaningful operating conditions. (C) 2017 Elsevier Ltd. All rights reserved.
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