What is the appropriate internal rate of return for highway projects?

If the internal rate of return is based on 8%, suppose the inflation rate is around 8%. If it is equal to 8%, it means that after the project is completed, there is no money except the "salary" that "oneself" takes, but it is still feasible. If it is less than 8%, it means that there is a high possibility of loss when the project is completed.

Because of inflation, the money earned in the future is probably not enough for the cost of investment. The internal rate of return is particularly important for projects with long payback period. For example, the general investment payback period of hotel construction is about 10- 15 years, and the investment operation period of large-scale tourism development is more than 50 years. This is the most popular and practical meaning of internal rate of return.

Extended data

IRR index can comprehensively reflect the efficiency and benefit value of project management and capital operation, which involves project capital plan and is the core index for real estate enterprises to monitor project operation. The discount rate used to calculate NPV is the weighted average financing cost of the project. Every enterprise has its own financing cost, which is usually a fixed value.

For example, if a residential project is developed, the discount rate is 10%, and the NPV of the project is calculated. 0, indicating that this project can be profitable. Now, the internal rate of return of this project is calculated as 5%. When the discount rate is equal to 5%, the net present value of the project is 0.