Posted by Jaysay on February 16, 2009 at 10:42:17:
Generally, they are referring to c-o-c, or ROE. IRR is generally only used for venture capital and private equity investments b/c it assumes all positive cash flow will be reinvested in the project with a large lump sum return at the end of the investment period. This is why MIRR was developed because it considers cost of capital and more closely reflects a discounted cash flow model.
It could be neither of the above. The classical definition of return on investment is the first year cashflow (excluding financing) divided by the total investment in Year 0.
Check out the sample proforma found in www.cremodel.com for a good example of the different definitions of ROI, IRR, NPV and Cash on Cash.