Do NPV and IRR Measure the Profitability of Investment Opportunities? Conditions as Measures of Profitability
(주)코리아스칼라
- 최초 등록일
- 2023.04.03
- 최종 저작일
- 2022.12
- 7페이지/ 어도비 PDF
- 가격 4,000원
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서지정보
ㆍ발행기관 : 한국산업경영시스템학회
ㆍ수록지정보 : 산업경영시스템학회지 / 45권 / 4호
ㆍ저자명 : Jinwook Kim
목차
1. Introduction
2. Role and Weakness of NPV
3. IRR and Variants
4. Relationships between Measures ofProfitability
5. Conclusions
References
영어 초록
Investors must adopt profitable investment opportunities to maximize their wealth. Almost all investment, finance, engineering economics textbooks explain that net present value (NPV) measures the profitability (or value) of investment opportunities in absolute size, and internal rate of return (IRR) measures the profitability of investment opportunities in relative proportions. However, NPV is a measure of the relative size of the return on investment opportunity to do-nothing alternative. Moreover, IRR can occur in multiple investment opportunities and may not exist. To make matters worse, IRR and NPV also have conflicting problems in accept-or-reject decisions. In this study, the reason why NPV and IRR cannot accurately measure the profitability of investment opportunities is identified, and fundamental characteristics that investment opportunity profitability measures should have are presented.
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