Anomalies in net present value calculations. A solution

Joan Pasqual (), José Antonio Tarrío and María José Pérez
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José Antonio Tarrío: Universidad de Barcelona
María José Pérez: Universidad Carlos III de Madrid

Hacienda Pública Española / Review of Public Economics, 2005, vol. 173, issue 2, 47-60

Abstract: The so-called anomalies that arise in the computation and interpretation of the Net Present Value (NPV) and the Internal Rate of Return (IRR) can be easily overcome if the properties of the NPV function are taken into account and it is clearly defined what is an investment and what is a credit. All the roots of the NPV function have economic meaning and, when there is at least one IRR, the NPV and the IRR criteria agree.

Keywords: Net Present Value; Internal Rate of Return; Investment Analysis; Project Evaluation. (search for similar items in EconPapers)
JEL-codes: D92 Q28 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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