Return-rate techniques

Return-rate techniques

Bachelor of Business Studies (BBS) — Second Year

Subject: Fundamentals of Financial Management (MGT 215)

Unit 8: Basics of Capital Budgeting

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of return-rate techniques.
• Apply the relevant financial model, calculation or analytical approach and explain its assumptions and decision implications.

Curriculum Scope

• Internal rate of return
• Modified internal rate of return
• Merits and limitations

Detailed Microsyllabus

1. Internal rate of return

   1. Rate equating discounted inflows and outflows.
   2. Calculate or estimate using the prescribed method.
   3. Recognize multiple-rate and ranking issues.

2. Modified internal rate

   1. Financing and reinvestment rates stated in the exercise.
   2. Combine terminal inflow and present outflow values.
   3. Compare IRR and MIRR assumptions and limitations.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 41-43.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here.