Internal Rate of Return Method

Internal Rate Return Interpolation

The internal rate of return IRR method, considered next, is largely analogous to the NPV method. Only two assumptions are modified - concerning the reinvestment of free cash flow surpluses and the balancing of capital tie-up and economic life differences. Also, a different target measure is considered the internal rate of return. The internal rate of return is the rate that leads to a NPV of zero when applied as the uniform discount rate. The internal rate of return represents the interest...

Characteristics and Classification of Investment Projects

Investments can be considered from different points of view. According to the cash flow oriented perspective an investment project can be characterised by a stream of cash flows starting with an initial investment outlay - a cash outflow. The basic task for investment decision-making then will be to ascertain whether the future benefits from the investment will make the initial outlay worthwhile. An investment project is a series of cash inflows and outflows, typically starting with a cash...

Visualisation of Financial Implications VoFI Method

The visualisation of financial implications VoFI method is based on the ideas of Heister 1962 that were later developed by Grob 1993 . Its defining feature is a comprehensive financial plan that considers all cash flows connected with an investment project. The VoFI comprehensive financial plan considers the economic consequences of an investment project, specifically in regard to The amounts and proportions of internal funds and debt capital used. The amounts and timing of debt redemption from...