I have been sharing this various finance professors and professionals. So trying to protect IP rights. Executive summary: Annual Rate of Value (ARV), the proposed metric , allows for projects of all shapes and sizes to be compared and ranked because it accounts for both “project size” and “project duration” but most importantly does not account for these two factors independently but instead as inseparably linked factors by way of a composite metric*. ARV is value per dollar-year (for the lack of a better term) with NPV as the numerator. ARV = NPV ÷ [(PV 0 × 0) + (PV 1 × 1) + (PV 2 × 2) + … + (PV n × n)] NPV is the ultimate measure of value, but it is an absolute measure not suitable for ranking. PI and EAB only consider one of “project size” and “project duration” and hence are inadequate. IRR is indeed suitable for ranking and factors in both size and duration of projects but suffers from well-known inherent f...
The purpose of this post is solely to protect my Intellectual Property Rights (IPR) if ever there arises a situation where I need to prove the novelty of my work. The post will not be structured. It is going to be a copy-paste operation. The only purpose is to document and date my idea. I first developed this idea in early 2020. I then developed it further in August 2023. Vinay helped me throughout this process. Very briefly, AVIR or Annualised Value Investment Ratio (AVIR) is a capital budgeting metric that will help rank projects of different sizes and durations. Every common metric that exists now, like NPV, IRR, PI, EAB, etc.. suffers from one or more major flaws and my contention is that AVIR addresses these flaws and is the most superior metric available. The copy paste starts now. 1. What is Annualised Value Investment Ratio (AVIR)? How is it different from VIR? Ans: VIR is the discounted value generated per dollar (discounted) invested. AVIR takes this a step further...