The net present value (NPV) is generally used in accept-or-reject decisions in engineering projects. Although the internal rate of return (IRR) is a highly complex and arbitrary process, it can reach the same conclusion as the NPV criterion. However, neither the NPV nor the IRR indicates how much money should be invested and how much profit can be made from an investment during a project. In this study, based on the reasons why the NPV and IRR cannot correctly measure the profitability of an investment, the must-have profitability measurement characteristics of an engineering project are presented.

ABSTRACT
1. INTRODUCTION
2. ROLE AND WEAKNESS OF NPV
3. IRR AND VARIANTS
4. RELATIONSHIPS BETWEEN MEASURES OF PROFITABILITY
5. CONCLUSIONS
REFERENCES

• 김진욱(창원대학교) | Jinwook Kim (Department of Industrial & Systems Engineering, Changwon National University, Republic of Korea)