Internal Rate of Return
Pitfall 4 - Term Structure Assumption
w We assume that discount rates are stable
during the term of the project.
w This assumption implies that all funds are
reinvested at the IRR.
w This is a false assumption.
Internal Rate of Return
Pitfall 4 - Term Structure Assumption
w We assume that discount rates are stable
during the term of the project.
w This assumption implies that all funds are
reinvested at the IRR.
w This is a false assumption.