Research on Project Investment: Methods of NPV, IRR and MIRR

DOI

10.2991/978-94-6463-042-8_102How to use a DOI?

Keywords

Net present value; internal rate of return; Modified internal rate of return; Investment decisions

Abstract

This article introduced three methods which can show the investment value. Net present value (NPV) and internal rate of return (IRR) are two useful tools to help investors to decide between different mutually exclusive projects. Both NPV and IRR have advantages and disadvantages. As the investment concept developed quickly, neither NPV nor IRR shows any reinvestment problems when making investment decisions. A new method named Modified internal rate of return (MIRR) solves these problems which improves IRR’s version. MIRR considers the capital cost as reinvestment rate and give a more accurate evaluation of the investment return. To conduct the methods research and implement related provement, a specific case of Mahjong Inc. was used as example for anaylsis. Some applications of MIRR were also introduced in this article.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Ji Qi
AU  - Yongshuo Wang
AU  - Yihan Xu
PY  - 2022
DA  - 2022/12/29
TI  - Research on Project Investment: Methods of NPV, IRR and MIRR
BT  - Proceedings of the 2022 International Conference on mathematical statistics and economic analysis (MSEA 2022)
PB  - Atlantis Press
SP  - 710
EP  - 715
SN  - 2352-538X
UR  - https://doi.org/10.2991/978-94-6463-042-8_102
DO  - 10.2991/978-94-6463-042-8_102
ID  - Qi2022
ER  -