This note specifies some results found in [Magni 2010. The Engineering Economists, 55(2), 150-180] where the Average Internal Rate of Return (AIRR) is presented, which overcome all the IRR difficulties. In particular, the AIRR approach enables to prove that (1) a project is not uniquely...

This paper deals with the problem of modelling in a formal way the concept of excessprofit, also known as residual income. A common idea is that excess profit is an unequivocalconcept, being the diference between profit and costs, where all types of costs are taken into account, included the...

Two measures of excess profit (residual income) are currently available in the literature: the standard one, of which Economic Value Added (EVA) (Stewart, 1991) is a major instantiation, and Systemic Value Added (SVA) (Magni, 2003, 2004, 2005), also named lost-capital residual income (Magni,...

The internal rate of return (IRR) and the corresponding criterion has well-known difficulties of applicability and reliability. Among other problems, a project may have no real-valued IRR. The latter problem has been recently solved by Magni (2010a), who shows that, for any project, a unique...

This paper analyzes the relations among different concepts such as earnings, profit, interest, rate, consumption, dividend, installment, cash flow, capital. It aims atembracing these notions in a unique conceptual "umbrella" , consisting of five perspectives: (1) accounting, (2) economic theory,...

Il presente lavoro tratta del classico criterio di capital budgeting derivato dal CAPM,secondo il quale un investimento è conveniente se e solo se il suo tasso di rendimento atteso è maggiore del costo del capitale. Tale criterio è esposto, tra gli altri, da Rubinstein (1973) ed è...