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Multiple Internal Rate of Return Revisited: Frequency of Occurrences

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  • Ean-Harn Ng
  • Mario G. Beruvides

Abstract

Research in multiple internal rate of return (MROR) has mainly focused on three areas: uniqueness, conditions where MROR occur, and solutions to MROR. In an attempt to solve for MROR, researchers have assumed that the occurrence of MROR is prevalent and thus a solution is direly needed. This article examines the probability that positive MROR would occur when variation is incorporated into the cash flow and the probability of getting positive MROR when multiple sign-change cash flow is generated. Results show that the probability of positive MROR occurring in multiple sign-change cash flows is relatively low and potentially a rare event.

Suggested Citation

  • Ean-Harn Ng & Mario G. Beruvides, 2015. "Multiple Internal Rate of Return Revisited: Frequency of Occurrences," The Engineering Economist, Taylor & Francis Journals, vol. 60(1), pages 75-87, January.
    • Handle: RePEc:taf:uteexx:v:60:y:2015:i:1:p:75-87
    DOI: 10.1080/0013791X.2013.865149
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    Cited by:

    1. Giuseppe Bonazzi & Mattia Iotti, 2016. "Evaluation of Investment in Renovation to Increase the Quality of Buildings: A Specific Discounted Cash Flow ( DCF ) Approach of Appraisal," Sustainability, MDPI, vol. 8(3), pages 1-17, March.
    2. Vicente Alcaraz Carrillo De Albornoz & Antonio Lara Galera & Juan Molina Millán, 2018. "Is It Correct to Use the Internal Rate of Return to Evaluate the Sustainability of Investment Decisions in Public Private Partnership Projects?," Sustainability, MDPI, vol. 10(12), pages 1-15, November.
    3. Whitmeyer Mark, 2018. "A Competitive Optimal Stopping Game," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(1), pages 1-15, January.

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