IDEAS home Printed from https://ideas.repec.org/h/spr/prbchp/978-3-319-43434-6_68.html
   My bibliography  Save this book chapter

Internal Rate of Return (IRR): A New Proposed Approach

In: Leadership, Innovation and Entrepreneurship as Driving Forces of the Global Economy

Author

Listed:
  • Murad Mohammed Mujahed

    (Canadian University of Dubai)

  • Elgilani Eltahir Elshareif

    (Canadian University of Dubai)

Abstract

This study tries to develop a new internal rate of return (IRR) approach assuming constant and positive cash flows. The traditional IRR method is implicitly based on trial and error that needs two initial guesses and slowly converges to the solution. The development so far was based on Newton–Raphson methods that reduce the two guesses to only one guess with quadratic convergence. However, this development has many limitations such as divergence at inflection points and pitfalls like division by zero. The progress of our study so far is to eliminate the initial guess with assumption of equal series of positive cash flows. Further, the expected finding of the new approach will assist practitioners and academics to compute the IRR accurately as the rate of return on the declining balance of the investment, analogous to the YTM on a premium bond and the contract rate on a fully amortized loan.

Suggested Citation

  • Murad Mohammed Mujahed & Elgilani Eltahir Elshareif, 2017. "Internal Rate of Return (IRR): A New Proposed Approach," Springer Proceedings in Business and Economics, in: Rachid Benlamri & Michael Sparer (ed.), Leadership, Innovation and Entrepreneurship as Driving Forces of the Global Economy, chapter 0, pages 761-767, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-43434-6_68
    DOI: 10.1007/978-3-319-43434-6_68
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    Bisection; Newton–Raphson; IRR;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:prbchp:978-3-319-43434-6_68. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.