Research On The Internal Rate Of Return Analysis And Index Optimization Of Non-conventional Projects In Full Cycle

In the evaluation practice of conventional investment projects,the most commonly used evaluation indexes are net present value NPV and internal rate of return IRR.Although there are many defects in these two indexes,it seems to have a comparative advantage to combine them in the local evaluation of project return rate.The NPV function of a conventional project is a concave function that decreases monotonously with the increase of the discount rate.But in non-conventional project,the NPV function no longer follow the monotone decreasing with the increase of the discount rate,and will show an abnormal fluctuation range,the IRR is likely to have multiple solutions.As the number of cash flow inverse signs increases and the strength of cash flow inversion is stronger,the abnormal fluctuation will increase and cross the horizontal axis of the discount rate multiple times,thus forming multiple IRRs.Non-conventional projects are not special projects.From the perspective of the full cycle,non-conventional projects are normal.In this paper,through the research of real estate projects,mineral resources development projects and some projects that need to be repeatedly invested in the full cycle,the IRR indicator,the modified internal rate of return MIRR indicator and the external rate of return ERR indicator are grouped and compared to identify and make the difference between a trade-off,generalize the common ground and continue to follow,which gives birth to the cash flow transformation method and the related transformed internal rate of return index TIRR.In this paper,through repeated verification,the intermediate inverse sign elimination of cash flow is realized based on the principle of the most approximate transformation.The calculated TIRR,as an important evaluation index of non-conventional projects,is of certain application value to replace IRR.It can be used to evaluate projects together with the ERR index.The research ideas provided in this paper are also expected to guide the investment evaluation of similar projects.