Teaching MIRR to Improve Comprehension of Investment Performance Evaluation Techniques: A Comment

Document Type

Article

Publication Date

Winter 2013

Publication Title

Journal of Economics and Finance Education

Abstract

Balyeat, et. al. (2013, this journal) suggest that IRR does not have a clear economic interpretation and that MIRR highlights the reinvestment assumptions of NPV and IRR thus increasing its value as a teaching tool. This comment addresses misconceptions found in the work of Balyeat, et. al. In particular, it reiterates the economic interpretation of IRR and reexamines the alleged reinvestment rate assumptions.

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