PROJECT HOLDING‐PERIOD RATE OF RETURN AND THE MIRR Article

Anderson, GA, Barber, JR. (1994). PROJECT HOLDING‐PERIOD RATE OF RETURN AND THE MIRR . JOURNAL OF BUSINESS FINANCE & ACCOUNTING, 21(4), 613-618. 10.1111/j.1468-5957.1994.tb00340.x

cited authors

  • Anderson, GA; Barber, JR

authors

abstract

  • In this paper we examine the relationship between the Modified Internal Rate of Return (MIRR) and a project's expected holding‐period rate of return assuming that cash flows are reinvested at the cost of capital. When cash flows are uncertain, the MIRR overstates the expected holding‐period rate of return. The relationship between the MIRR and a project's expected holding‐period rate of return is shown to be a simple function of conventional project statistics like the coefficient of variation of the present value of random cash flows, the profitability index, the cost of capital, and the project's life. Copyright © 1994, Wiley Blackwell. All rights reserved

publication date

  • January 1, 1994

published in

Digital Object Identifier (DOI)

start page

  • 613

end page

  • 618

volume

  • 21

issue

  • 4