Weaknesses of Internal Rate of Return (IRR)

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Weaknesses of Internal Rate of Return (IRR)
The primary weaknesses of this method are:
- IIR sometimes requires unrealistic assumptions about reinvestment of funds, and
- Manual calculation is difficult.

Weaknesses of IRR Method
Alpin McGregor, freeelance, United Kingdom, Member
The easiest way of looking at weakness of IRR model is by comparing 2 situations:
1. You have $1 and earn 100% rate of return in one year. You wi...

Evaluation Methods are All Based on Assumptions
Rachid LANGAR, Business Consultant, Qatar, Member
Project evaluation are mostly based on assumptions and don't require to be very accurate.
None of the evaluation methods (IRR / NPV) is perfect ...

Do not Use IRR When Investing in Business Improvements
Tyrone Skogstrom, Management Consultant, Sweden, Member
I do not recommend IRR as a decision factor for example IT investments or any investment with business improvement as objective. IRR works well only i...


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