Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 35

Use the data in exercise 12-33 and the appropriate function in Excel to estimate both the IRR and the MIRR of the proposed investment. What accounts for the difference in these two measures?

Step 1 of 5

Internal Rate of Return:

In order to check the profit that a potential investment of an organization can generate, the metric that is used is called Internal Rate of Return. The profit that an investment can generate is usually determined annually thereby showing the rate of growth. Over different periods, the yearly returns of an organization can be compared using IRR.