Hostname: page-component-78c5997874-ndw9j Total loading time: 0 Render date: 2024-11-19T14:51:34.766Z Has data issue: false hasContentIssue false
  • English
  • Français

Comment: The Unique, Real Internal Rate of Return

Published online by Cambridge University Press:  06 April 2009

Robert Capettini ,
Richard A. Grimlund  and
Howard R. Toole
Get access Rights & Permissions [Opens in a new window]

Extract

In the June 1978 issue of this Journal, Herbst [2, p. 363] cautioned the reader to beware of a unique, real internal rate of return (IRR) because such a return is “an incorrect measure of the return on investment” for a mixed project. While it is true, as discussed by Teichroew, Robichek and Montalbano (TRM) [4], and now by Herbst, that a mixed project may have a unique IRR, several additional observations developed by TRM should be added to Herbst's discussion. These comments will clarify the implications of Herbst's paper for a decision maker who has a mixed project with a unique real IRR.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 14 , Issue 5 , December 1979 , pp. 1091 - 1094
Copyright
Copyright © School of Business Administration, University of Washington 1979

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

[1]Bernhard, R. H. “Unrecovered Investment, Uniqueness of the Internal Rate, and the Question of Project Acceptability.” Journal of Financial and Quantitative Analysis, Vol. 12 (03 1977), pp. 33–38.CrossRefGoogle Scholar
[2]Herbst, A. “The Unique, Real Internal Rate of Return: Caveat Emptor!” Journal of Financial and Quantitative Analysis, Vol. 13 (06 1978), pp. 363–370.CrossRefGoogle Scholar
[3]Norstrø, C. J. “A Sufficient Condition for a Unique Nonnegative Internal Rate of Return.” Journal of Financial and Quantitative Analysis, Vol. 7 (06 1972), pp. 1835–1839.CrossRefGoogle Scholar
[4]Teichroew, D.; Robichek, A.; and Montalbano, M.. “An Analysis of Criteria for Investment and Financial Decisions under Certainty.” Management Sciences, Vol. 12 (11 1965), pp. 151–179.CrossRefGoogle Scholar