 Evaluation of Nonconventional Projects: GIRR and GERR vs. MIRRNikolay Yu. Kulakov and Anastasia Blaset Kastro The Engineering Economist, 2015, vol. 60, issue 3, 183-196 Abstract: This article considers evaluation of nonconventional projects and projects with cash outflows occurring not only at the beginning of project. It has been proved that, being a monotonically increasing function of a discount or finance rate, the modified internal rate of return (MIRR) fails to characterize the rate of return of such projects. We showed how to eliminate the MIRR's dependence on a finance rate and proved that in this case the MIRR becomes the “equivalent rate of return” proposed by Solomon. The generalized internal rate of return (GIRR) and generalized external rate of return (GERR) indices based on the generalized net present value (GNPV) approach are considered as alternatives to the MIRR. Several nonconventional projects have been evaluated using the MIRR, GIRR, and GERR rules. In order to verify the estimates, we drew up a simple project balance sheet, which demonstrated correctness of the results based on the GIRR and GERR rules and errors inherent in the MIRR application. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:uteexx:v:60:y:2015:i:3:p:183-196 Ordering information: This journal article can be ordered from DOI: 10.1080/0013791X.2014.1002053 Access Statistics for this article The Engineering Economist is currently edited by Sarah Ryan More articles in The Engineering Economist from Taylor & Francis Journals |
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