Question

Discuss the differences between return on investment captial method (RIC) and modified internal rate of return (MIRR) method? In addition, list other methods for project analyze with various rate options for economic analysis studies.

Answer 1

The RIC is identified with the IRR, and it is characterized as the financing cost that makes the net contributed capital equivalent to zero toward the finish of the undertaking life. RIC appears to be more level headed for blended ventures. In this manner, the IRC is likewise the speculation/reinvestment rate which a venture produces over its lifetime – and thus IRC is otherwise called the 'financial yield' on a speculation. MIRR is the IRR for a task with an indistinguishable level of venture and NPV to that being considered yet with a solitary terminal installment.

IRC and MIRR are two capital planning systems that measure the venture allure.

The distinction between IRC and MIRR are as take after:-

1. IRC is a technique for figuring the rate of return considering inside components, i.e. barring expense of capital and swelling while, MIRR is a capital planning strategy, that ascertain rate of return utilizing expense of capital and is utilized to rank different speculations of equivalent size.
2. IRC is the rate at which NPV is equivalent to zero though, MIRR is the rate at which NPV of terminal inflows is equivalent to the surge, i.e. venture.
3. IRC precision is low when contrasted with MIRR.

The methods for project analyze with various rate options for economic analysis studies are :-

• Cost-of-illness analysis
• Cost-minimization analysis
• Cost-effectiveness analysis (CEA)
• Cost-benefit analysis (CBA)
• Budget-impact analysis (BIA)