Using The Internal Rate Of Return In Public Sector Project Evaluations

Project evaluation in the public sector is a recent development, to which there are basically two approaches. One is to capitalize the flow of future costs and benefits as net present value (NPV) and to prefer the higher NPV when choosing between two projects. The other is to Find the internal rate of return (IRR), that is, the discount rate that brings the flow of costs in equilibrium with the flow of the benefits at a particular time.