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March 18, 2026The Accounting Review

Present Value Models and the Multi-Asset Problem: Comment.

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Authors

ACAnthony J. CurleyCCCharles G. Carpenter

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Overview

Comments highlight issues with internal rate of return model in financial accounting, suggesting implications for analysis.

Key Points

  • This article comments on the relevance of the internal rate of return (IRR) model in the context of multi-asset evaluations.
  • Analyzed the controversies surrounding the IRR model in financial accounting.
  • Discussed the advantages of algebraic versus arithmetic demonstration of the IRR.
  • Examined the implications of changing reinvestment patterns on IRR and average returns.
  • Concluded that the IRR model may not be effective for firms over time due to its implication of constant return rates.
  • Noted that geometric mean can represent average periodic rate of return even with varying reinvestment patterns.
  • Identified that assumptions regarding reinvestment are crucial for calculating combined rates of return.

Cite This Study

Curley et al. (1974) studied this question.

synapsesocial.com/papers/69ba44154e9516ffd37a603chttps://doi.org/10.2308/tar-4492021
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