CLARIFYING THE AMBIGUITIES OF INTERNAL RATE OF RETURN METHOD VERSUS NET PRESENT VALUE METHOD FOR ANALYZING MUTUALLY EXCLUSIVE ALTERNATIVES

Many engineering economists have attempted to demonstrate that proper use of either the net present value method or the internal rate of return method to analyze mutually exclusive alternatives will result in identical and correct economic decisions. Unfortunatley, however, the internal rate of return method, even when properly applied, often will result in either ambiguous or incorrect economic decisions. The purpose of this paper is to illustrate more completely and definitively the ambiguities that can occur and to show that the 2 methods cannot be reconciled without additional calculations, which, by definition, go beyond the internal rate of return method as strictly and properly applied.

Media Info

  • Media Type: Print
  • Features: Figures; References;
  • Pagination: pp 48-62
  • Monograph Title: Application of economic analysis to transportation problems
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00129480
  • Record Type: Publication
  • ISBN: 0309024560
  • Files: TRIS, TRB
  • Created Date: Mar 10 1976 12:00AM