On the Rate of Return and Valuation of Non-Conventional Projects

Carlos Heitor Campani: We provide a solution for evaluating non-conventional projects, firstly showing that the well-known modified internal rate of return does not correctly answer what investors want to measure.

Author(s):

Carlos Heitor Campani

Professor of Finance, COPPEAD Graduate School of BusinessResearch Associate, EDHEC-Risk Institute

Even if one correctly uses the net present value criterion for capital budgeting, we show that it fails for nonconventional projects. Our contribution is thus twofold: To yield the correct rate of return for nonconventional projects and to allow practitioners to correctly calculate comparable net present values to take correct investment decisions.
Pdf
On the Rate of Return and Valuation of Non-Conventional Projects...
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Type: Working paper
Date: le 06/10/2014
Extra information : For more information, please contact EDHEC Research and Development Department [ research@drd.edhec.edu]
Research Cluster : Finance

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