Article-MIRR-A_Better_Measure教程.pdfVIP

Business Horizons (2008) 51, 321—329 /locate/bushor MIRR: A better measure Herbert Kierulff School of Business and Economics, Seattle Pacific University, 3307 Third Avenue West, Seattle, WA 98119, U.S.A. KEYWORDS Abstract Over the past 60 years Net Present Value (NPV) and the Internal Rate of Modified internal rate Return (IRR) have emerged from obscurity to become the overwhelming choices for of return; the quantitative measurement of investment attractiveness in modern corporations. Capital budgeting; Despite their current popularity, neither NPV nor IRR was designed to deal effectively Investment decisions; with the vast majority of investment problems, meaning those where periodic free Discounting; cash flows are generated between the time of asset purchase and the time of sale. NPV Discounted cash flow assumes that periodic cash flows can and will be reinvested at the NPV discount rate, either at the cost of capital or another risk adjusted discount rate; IRR assumes reinvestment at the IRR. Neither assumption is usually realistic. In addition, when evaluating projects in terms of their financial attractiveness, the two measures may rank projects differently. This becomes important when capital budgets are limited. Finally, a project may have several IRRs if cash flows go from negative to positive more than once. The Modified Internal Rate of Return (MIRR), discovered in the 18th century, does account fo