Right, think ive finally got it,
r = 1.14 and therefore project A net return on investment is 114%
and for project B r = 1.24 and therefore the net return oin investment = 124% ?
Those are indeed the projects' IRRs (told ya they were huge--I've got some investors who'd kill for a piece of that action; alas, such outsized returns are usually only found in the magical land of textbook-dom).
But before you stamp this one "done", revisit what I said earlier: Check your text very carefully for its definition of "net return on investment". What you've done is to calculate the project's IRR, or 'yield', or ROR (rate of return), using a few common synonyms found in the biz.
There are, though, instances of inconsistent terminology and variations in lingo in the finance game, so just make sure that "net return on investment" in your text doesn't refer to a concept that's different from our old pal IRR.
Cheers!
No comments. Have a looksee here:
Rate of return - Wikipedia, the free encyclopedia