The internal rate of return of fuzzy cash flow |
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Authors: | L Biacino M R Simonelli |
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Institution: | 1. Dipartimento di Matematica e, Applicazioni ?R. Caccioppoli?, Napoli 2. Istituto di Matematica Finanziaria, Istituto Universitario Navale, Napoli
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Abstract: | An internal rate of return (IRR) of an investment of financing project with cash flow (a0, a1, a2,..., an) is usually defined as a rate of interest such that $$a_0 + a_{\text{1}} {\text{(1}} + r{\text{)}}^{ - 1} + ... + a_n (1 + r)^{ - n} = 0$$ . If the cash flow has one sign change then the previous equation has a unique solution τ>?1. Generally the IRR does not extend to fuzzy cash flows, as it can be seen with examples (see 2]). In this paper we show that under suitable hypotheses a unique fuzzy IRR exists for a fuzzy cash flow. |
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