Anomalies in net present value calculations. A solution
AbstractThe so-called anomalies that arise in the computation and interpretation of the Net Present Value (NPV) and the Internal Rate of Return (IRR) can be easily overcome if the properties of the NPV function are taken into account and it is clearly defined what is an investment and what is a credit. All the roots of the NPV function have economic meaning and, when there is at least one IRR, the NPV and the IRR criteria agree.
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Bibliographic InfoArticle provided by IEF in its journal Hacienda Pública Española/Revista de Economía Pública.
Volume (Year): 173 (2005)
Issue (Month): 2 (June)
Net Present Value; Internal Rate of Return; Investment Analysis; Project Evaluation.;
Find related papers by JEL classification:
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oehmke, James F., 2000. "Anomalies in net present value calculations," Economics Letters, Elsevier, vol. 67(3), pages 349-351, June.
- Pasqual, Joan & Padilla, Emilio & Jadotte, Evans, 2013. "Technical note: Equivalence of different profitability criteria with the net present value," International Journal of Production Economics, Elsevier, vol. 142(1), pages 205-210.
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