On the Internal Rate of Return Criterion

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Abstract
Several different procedures for the implementation of the internal rate of return criterion are presented in the literature on investment projects evaluation. Taking the net present worth criterion as a basis for comparison, a survey of some of the suggested procedures and a critique of their theoretical basis are presented. It is showed that, although leading to a proper evaluaticn, they are internally inconsistent in the sense of incorporating modifications that may not really be necessary. To circumvent this possibility, we are going to suggest a conceptual algorithm that should be implemented if we are concerned with the formal application of the internal rate of return criterion.