Chapter 8. Adaptive measure of internal rate of return

By the OIRR modifies we got a new indicator of the adaptive operating profitability of AOIRR, where, unlike OIRR, discounted amounts of interest payments and loan debts of project participants are given with different weight (importance). Corresponding weights are calculated taking into account the potential on for growth of interest payments and loan indebtedness for the investor and the recipient at the time the project is completed. Here, by virtue of the requirement of the NPV-compatibility, it turns out that the increase in interest income and loans indebtedness of the investor should occur more intensively than for the recipient. It is shown that AOIRR is expressed by a continuous spline function, whose fragments at each interval between neighboring IRR values are rational functions with a linear dependence of both the numerator and denominator on the discount rate. At the same time, AOIRR depends on the IRR values (which are the boundaries of the considered interval of the discount rate) and the weight coefficients as an assessment of the importance of the contribution to the project from the investor and the recipient. It is established that due to the choice of these weighting factors, it is possible to achieve the coincidence of AOIRR with any pre-specified indicator of profitableness, which which is differentiable and non-decreasing on a discount rate. Specific formulas are obtained for the representation in the form of the AOIRR of the MIRR and DIRR indicators