دانلود مقاله Economic Analysis Based on Rate of Return

دانلود مقاله Economic Analysis Based on Rate of Return

نوع فایل: power point

فرمت فایل: pptx

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تعداد اسلاید : 27 صفحه

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Engr 360 Engineering Econ. 7.1Economic Analysis Based on Rate of Return  The key application here is to interpret or resolve feasible  alternatives (cash flows) such that an interest rate can be  computed whereby the benefits are equivalent to the costs.Definition:  Internal Rate of Return (IRR) – IRR is the interest rate at which the net present worth (NPW)  is equal to zero. It is the interest rate that sets up a breakeven situation for a  series of cash flows.

Engr 360 Engineering Econ. 7.2Typical Investment Situation IRR is the interest rate earned on the unrecovered investment  such that the payment schedule makes the unrecovered  investment equal to zero at the end of the life of the investment. In other words, the IRR is the percent return on: the unrecovered investment plus the partial return of the  investment.  An investment is attractive if the IRR > i  where i = interest rate for the investment terms. Conversely, a loan is attractive if the IRR < i where i = interest rate for the loan terms