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THE EX-POST INTERNAL RATE OF RETURN: WHO NEEDS IT?*
*
I am grateful to Bob Officer for encouraging me to write this paper and for suggesting an extension of an earlier draft. Thanks for helpful comments are also due to Ian McDonald and Bob Nicol.
Abstract:
The relationship between the accounting rate of return and the internal rate of return has been the subject of quite a number of articles. In many of these, it has been assumed that the ex post internal rate of return represents a desirable measure of performance, and efforts have been made to deduce its value from accounting rates of return. The present paper draws attention to some limitations of the ex post internal rate of return and throws doubt on its usefulness as a measure of performance.
