The Unique, Real Internal Rate of Return: Caveat Emptor!

Anthony Herbst

Journal of Financial and Quantitative Analysis, 1978, vol. 13, issue 2, 363-370

Abstract: The purpose of this paper is to show that the internal rate of return (IRR) even when unique and real may nevertheless be an incorrect measure of the return on investment, and to prove that all projects characterized by negative flows occurring only at the beginning and end will be mixed investments for which the IRR, whether unique and real or not, is not a correct measure of investment return.

Date: 1978
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