Related Topics, Links and Notes

• The paper Internal Rate of Return Revisited was published in this format under auspices of the Social Science Research Network (SSRN).   The position in IRR Revisited has been previously presented in other formats and forums.
• An introduction to IRR Revisited as it relates to Economic Analysis (EA), Cost-Benefit Analysis (CBA) and the like in government is on the RiskWorld server at Internal Rate of Return Revisited: Economic Analysis. While including IRR in discounting has broader implications than government, the need is perhaps greatest in government decision making. If for no other reason, the size of the commitments made ($trillions), makes getting it right the first time extremely important. Most of the links below relate to using IRR in government decision making.
• Cost Benefit Analysis (CBA) or Benefit Cost Analysis (BCA)?  Largely semantics.  CBA and BCA are essentially the same. There is some utility to expressing the ratio as Benefit/Cost in that bigger is better, i.e., benefits up and/or cost down.  Convention still favors CBA.  An AltaVista search on January 15, 1998 gave  5,223 hits using "Cost Benefit Analysis" and 804 hits using "Benefit Cost Analysis."
• RiskWorld at http://www.riskworld.com maintains up-to-date links on related topics. Of special interest are the reports of the Presidential/Congressional Commission on Risk Assessment and Risk Management. The Commission usually has an article or eventstarting on the RiskWorld front page at http://www.riskworld.com/tcnetwrk/riskwrld/rw5me001.htm . Resources for the Future (RFF) is a not-for-profit organization supporting the Commission. RFF is at http://www.rff.org/ .
• The U.S. Environmental Protection Agency (EPA) home page is at http://www.epa.gov/ .
• The Canadian Treasury Board Secretariat for Regulatory Affairs is at http://www.tbs-sct.gc.ca/ .
• The U.S. Office of Management and Budget (OMB) home page is at http://www.whitehouse.gov/OMB/.  .
• Examples of problems that can arise by using NPV only (and other problems) in EAs, CBAs and the like are in a report:

United States General Accounting Office
GAO Report to Congressional Committees
April 1997
AIR POLLUTION
Information Contained in EPA's Regulatory Impact Analyses Can Be Made Clearer
GAO/RCED-97-38

The GAO report in text and .PDF (Portable Document Format by Adobe) formats is available from the abstract athttp://www.gao.gov/AIndexFY97/abstracts/rc97038.htm .  You can view the somewhat abbreviated text version directly at http://www.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=gao&docid=f:rc97038.txt .  

• For examples of what can happen when things really turn south, see the Regulation Home Page starting at http://www.regulation.org/ . Use the links at the bottom of http://www.regulation.org/keyfacts.html . Be patient; it is a slow load.
• Selected links relevant to decision making, Discounted Cash Flow, Net Present Value, Internal Rate of Return the like.
• CISM700 - Financial Management, Capital Budgeting and Cash Flow Analysis, Prof. Sid Sytsma - Ferris State University.
• The Business Case Web Site, Tools, training, and practical help for everyone who builds the financial business case.
• The Development of a Theory of Corporate Investment Decision Making: An Historical Perspective with Implications for Future Development and Teaching.
• Sloan Managment Review, Massachusetts Institute of Technology, Winter 1974, Volume 15, Number 2, Decision Support Systems: An Application to Corporate Planning.  NPV and IRR in a decision support system.
• Professor Campbell R. Harvey's WWWFinance Project Evaluation. Good coverage of DCF topics.
• John F. Latcher, CPA, Online Consulting.  Excel spreadsheet setups.
• New York University, Stern School of Business, Corporate Finance Spreadsheets.
• Economic Value Added as a Management tool.  Currently the most popular Value based measure is Economic Value Added.  There has been a vivid debate for and against EVA in academic and management literature.
• Cash Flow and Performance Measurement: Managing for Value.  Interviews with executives at 12 case-study companies revealed that while the executives of these companies used different financial performance measures, all were concerned with creating shareholder value by generating earnings and cash flow greater than the cost of the capital entrusted to them.
• Economic Value Added (EVA).  The Economic Value Added (EVA) is a measure of surplus value created on an investment.
• The Top 10 Things To Consider When Making A Capital Budgeting or Investment Decision.
• Brealey and Myers, index to lecture notes by Brad De Long, Associate Professor of Economics, University of California at Berkeley.
• Selected Linked References Relative to IRR in Environmental Decision-Making:

  • Campbell, Harvey R., Professor. WWW Finance Project Evaluation. Duke University, Fuqua School of Business. Basic DCF. Typical treatment.

  • Damodaran, Aswath. Economic Value Added (EVA).  New York University, Stern School of Business. EVA an alternative to DCF. (Site difficult to navigate.)

  • Davis, Henry A, Cash Flow and Performance Measurement: Managing for Value.  Interviews with executives at 12 case-study companies.

  • De Long, Brad, Associate Professor, Brealey and Myers: Index to Lecture Notes. University of California at Berkeley.

  • Dempsey, Mike. Development of a Theory of Corporate Investment Decision Making: An Historical Perspective with Implications for Future Development and Teaching. University of Leeds (UK). Describes how Net Present Value became dominant in the finance discipline.

  • Hubbard, R. Glenn. Investment decisions and public policy. List of papers only, links to the papers themselves are inoperative.

  • Mäkeläinen, Esa, Economic Value Added as a Management Tool.  Helsinki School of Economics. Value based measure: Economic Value Added.   An alternative to DCF.

  • Meador, Charles Lawrence and Ness, David N., Decision Support Systems: An Application to Corporate Planning.  Sloan Managment Review, Massachusetts Institute of Technology, Winter 1974, Volume 15, Number 2. NPV and IRR in a decision support system.

• The Cranfield School of Management, Cranfield University, is at http://www.cranfield.ac.uk/prospectus/som.htm .

• Please contact me, Ray Martin, Ray_Martin@AltaVista.net if a link is lost, if you would like to add one, or if you see a problem with one of my working papers. Especially with problems. Really.

Access Since August 10, 1998: