engleski

Implementing the Internal Rate of Return Financial Function in Evaluating Investment Projects

Each and every entrepreneur is, at least once, obligated to make the decision whether to invest into expanding his/her business or not. The simplest way of resolving whether it is worthwhile investing into such ideas or not, is to carry out an investment study. The study calculates and establishes the acceptability of such investments by using various indicators and methods. Computers, to a large extent, facilitate this calculating process by using mentioned indicators. The implementation of the most commonly used methods of the dynamic approach to investment project evaluation, the net present value and the internal rate of return methods, is largely facilitated by the use of the @NPV and the @IRR financial functions from the Excel program package. However, the internal rate of return method has three basic flaws limiting its implementation ability. But, the implementation of the @IRR financial function is possible in all situations where the internal rate of return method shows its limitations, since we can reach the same results by simpler and a quicker calculations of desired indicators.

Internal Rate of Return; Financial Function; Evaluation; Investment Project

WSEAS = World Scientific and Engineering Academy and Society