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  Internal Rate of Return Revisited - Internal Rate of Return (IRR) and Net Present Value (NPV) are complementary measures of Discounted Cash Flow (DCF). They have essentially equivalent utility.  The Relevant IRR (RIRR) is not inferior to NPV. IRR is Okay!

Download the original Internal Rate of Return Revisited  from the Social Science Research Network (SSRN) Electronic Library.  It is in Portable Document Format (PDF). The sample files are not linked from this version.

Download a reader  from Adobe.

Download the sample files for use with either the Hypertext or PDF versions above.

This PDF version of Internal Rate of Return Revisited includes links to sample files.  It requires Adobe Acrobat version 3.0x or higher for the bookmarks and links to work.  You must also be online in order for the links to work.

Internal Rate of Return Revisited: Economic Analysis links Economic Analysis (EA), Cost-Benefit Analysis (CBA) to the relevant section of the Presidential/Congressional Commission on Risk Assessment and Risk Management Final Report, Volume 1, 1977.  Problems identified by the Commission would be mitigated if not resolved by simply using both measures of Discounted Cash Flow rather than only one.  These papers are on the RiskWorld server.

A Buy-Lease sample problem illustrates the relationship between Discounted Cash Flow (DCF) in a public sector Cost-Benefit Analysis (CBA) with no revenue stream and an identical problem in the private sector.

Peer Review.   Questions (actually polite challenges) to my IRR is Okay thesis have been posed the most times in the context of the Principles of Corporate Finance textbook by Richard A. Brealey and Stewart C. Myers, commonly called "Brealey and Myers (B&M)." The original IRR Revisited working paper addressed a composite of IRR criticisms from various sources, of which B&M was only one.  This paper focuses on the points of disagreement with B&M: IRR treatment and separation of risk and return only.

Go to an abstract of the closest position I have found to the IRR is Okay thesis presented here.  It was done by Professor Richard H. Bernhard, North Carolina State University.

  Internal Rate of Return in the Department of Defense (IRR in DoD) illustrates how IRR could be used in a DoD sample analysis (Corporate Information Management Functional Economic Analysis (CIM FEA)).  (These are overhead slides only requiring familiarity with the topic in order to use them effectively.)

The IRR is Okay thesis was rejected by the National Science Foundation (NSF) and the US Environmental Protection Agency (EPA) July 14, 1999. The proposal was in response to their joint solicitation on Decision-Making and Valuation for Environmental Policy (DMVEP).

• Click on proposal to go to my submission to NSF. It is in PDF, as submitted online via NSF Fastlane.

• Click on reviews to go to the NSF/EPA rejection letter and reviews, also in PDF. 

• Click on review of the reviews for a breakout of the points made in the NSF/EPA reviews.  They are essentially the same ones made in the informal peer review.  My responses are paraphrased, but all are taken from the proposal.  No new information is added.

• Click on Why NPV is Good for and example of the disagreement and links to a summary of the mainstream view addressed in the proposal, reviews to the proposal, and the informal peer review linked above.

All inputs are appreciated, especially from previous reviewers. I would be pleased to put all received online here with your permission.  None excluded.   No changes.  Warts and all.   

Hierarchical versus Team Management is a table that indicates the characteristics and different incentives in a hierarchical organizational structure versus a flat one.

Related Topics, Links and Notes is a catch-all page for information not covered in other papers.

Curriculum Vitae.

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