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