Abstract
Purpose Present Worth (PW) and Internal Rate of Return (IRR) are two popular economic decision criteria in engineering economic analysis, but PW is preferred to IRR because of several deficiencies including multiple internal rates of return (MROR). Research in MROR has mainly focused on two areas: conditions for MROR occurrence and unique positive IRR, and solutions to MROR. This paper discusses MROR problems in depth. Methods In two areas of MROR, main and recent research streams are reviewed and illustrated with numerical examples. Also, a concrete measure to clarify the meaning of AIRR(Average IRR) proposed by Magni(2010) to resolve several problems of IRR is provided. Results Scopes and levels to cover MROR problems in textbooks of engineering economy (EE) field are surveyed and a new pedagogical proposal for instructors to teach MROR problems in EE class is presented. Conclusion Despite several drawbacks including MROR, surveys for managers have consistently shown that substantial practitioners still favor IRR. Results and proposals in this article will be helpful to enhance the study achievement for IRR in EE class of university.
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