Chapter 10. Examples of the evaluation of profitableness of projects with multiple IRR values

Alexandr Zhevnyak

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Abstract: Examples of building indicators of profitableness MIRR , DIRR and AOIRR are considered, for projects of borrowing and investment projects with multiple IRR values. Details about the application of the replacementing loans method with calculation of the dynamics of loan indebtedness and discounted amounts of interest payments are discussed in detail. A comparative analysis of these indicators is given. Their features are discussed taking into account testing under market conditions with real credit and deposit rates of the debt market. The problem of high sensitivity of projects with multiple IRR values to small changes in the flow of payments is discussed. Then the values and the quantity of IRR very change, which entails a significant change in the NPV and all the indicators of profitability.

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