A systematic approach to finding internal rate of return using the interpolation method, based on 'big vs. small' concept

Jun Jie Ng

International Journal of Education Economics and Development, 2013, vol. 4, issue 3, 278-284

Abstract: Engineering economy entails the dollars-and-cents side of the decisions engineers make today (Sullivan et al., 2012). In the context of engineering economy, engineers make recommendations to work proposals and compare these alternatives based on several criterions. One such criterion is the computation of internal rate of return (IRR) during an incremental analysis process to determine if a project is worth investing today. This paper presents a systematic rather than mathematical aspect of determining IRR using the interpolation method that will ease manual calculations. This will be useful for learning engineers in higher level schools and institutions in learning this concept for the first time in-class.

Keywords: engineering economics; internal rate of return; IRR; incremental analysis; systems engineering; interpolation; engineering education. (search for similar items in EconPapers)
Date: 2013
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