THE RATE OF RETURN AS A MEASURE OF PERFORMANCE

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Abstract
Papers by Wyatt (Wyatt, 1984) and Hall (Hall, 1985) have addressed the subject of property performance measurement in this journal, and the topicality of the subject has been ensured by the response to Hager and Lord's paper to the Institute of Actuaries (see Editorial, Journal of Valuation, 3: and Brown, 1985). However, the measure employed has not been the subject of detailed analysis, and at various times the time weighted rate of return, the money weighted rate of return, the internal rate of return and others have been suggested as the appropriate measure. It is not even clear whether MWRR and IRR are identical measures. This paper examines alternative measures and demonstrates the difference between MWRR and IRR and makes recommendations of the correct measure.

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