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Chapter 9. Verification of profitableness indicators

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  • Alexandr V. Zhevnyak

Abstract

For any predefined profitableness indicator that may be a representation in the form of AOIRR, a theoretical credit-deposit index (ICD) is calculated in each interval between two neighboring IRR values. It characterizes the ratio of the significance of the contribution to the investor and recipient project, being a fairly simple function of free parameters that reflect these significance. At the same time, a market ICD is calculated where, in order to increase the interest payments and loan debts of the investor and the recipient, market rates of the loan and deposit are applied, respectively. Testing (verification) of investment project profitableness indicators is carried out by the criterion of proximity of the theoretical and market ICD. The technique of applying the proposed this methodology for testing profitableness indicators is demonstrated on three examples of different duration with simple and multiple IRR values

Suggested Citation

  • Alexandr V. Zhevnyak, . "Chapter 9. Verification of profitableness indicators," NEW CONCEPT OF RETURN ON BORROWED AND INVESTMENT PROJECTS,, Socionet.
  • Handle: RePEc:nos:bedcdu:vc09
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