When and How to Use NPV, IRR, and Modified IRR
The Economic Evaluation Notes are arranged in three groups. The first group (TRN-6 to TRN-10) provides criteria for selection a particular evaluation technique or approach; the second (TRN-11 to TRN-17) addresses the selection of values of various...
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2005/01/6371290/notes-economic-evaluaiton-transport-projects-use-npv-irr-modified-irr-notes-economic-evaluation-transport-projects-use-npv-irr-modified-irr http://hdl.handle.net/10986/11792 |
| Summary: | The Economic Evaluation Notes are
arranged in three groups. The first group (TRN-6 to TRN-10)
provides criteria for selection a particular evaluation
technique or approach; the second (TRN-11 to TRN-17)
addresses the selection of values of various inputs to the
evaluation, and the third (TRN-18 to TRN-26) deals with
specific problematic issues in economic evaluation. The
Notes are preceded by a Framework (TRN-5), that provides the
context within which we use economic evaluation in the
transport sector. All three NPV, IRR, and modified IRR are
summary measures of project performance. Each one provides a
single figure summarizing the impact of the project on
economic welfare. Each of the three measures does, however,
give subtly different information: 1) NPV focuses on the
total welfare gain over the whole life of the project; and,
2) IRR and Modified IRR focus on the rate at which benefits
are realized following an initial transport investment. |
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