interim

Examples of interim in the following topics:

• Disadvantages of the IRR Method

  • In addition, IRR assumes reinvestment of interim cash flows in projects with equal rates of return (the reinvestment can be the same project or a different project).
  • Therefore, IRR overstates the annual equivalent rate of return for a project whose interim cash flows are reinvested at a rate lower than the calculated IRR.
  • This presents a problem, especially for high IRR projects, since there is frequently not another project available in the interim that can earn the same rate of return as the first project.
  • When the calculated IRR is higher than the true reinvestment rate for interim cash flows, the measure will overestimate–sometimes very significantly–the annual equivalent return from the project.
  • The formula assumes that the company has additional projects, with equally attractive prospects, in which to invest the interim cash flows.

• Methods of Paying Dividends

  • Interim dividends are dividend payments made before a company's annual general meeting and final financial statements.
  • This declared dividend usually accompanies the company's interim financial statements.

• Reinvestment Assumptions

  • IRR assumes reinvestment of interim cash flows in projects with equal rates of return (the reinvestment can be the same project or a different project).
  • Therefore, IRR overstates the annual equivalent rate of return for a project that has interim cash flows which are reinvested at a rate lower than the calculated IRR.
  • This presents a problem, especially for high IRR projects, since there is frequently not another project available in the interim that can earn the same rate of return as the first project.
  • When the calculated IRR is higher than the true reinvestment rate for interim cash flows, the measure will overestimate–sometimes very significantly–the annual equivalent return from the project.

• Modified IRR

  • Firstly, IRR assumes that interim positive cash flows are reinvested at the same rate of return as that of the project that generated them.
  • Generally, for comparing projects more fairly, the weighted average cost of capital should be used for reinvesting the interim cash flows.

• Reinvestment Risk

  • Zero coupon bonds are the only fixed-income instruments to have no reinvestment risk, since they have no interim coupon payments.

• Overview of Derivatives

  • Forwards also typically have no interim partial settlements - or "true-ups" - in margin requirements like futures, such that the parties do not exchange additional property, securing the party at gain, and the entire unrealized gain or loss builds up while the contract is open.

• Types of Exchange Hedges: Forward, Money Market, and Future

  • Forwards also typically have no interim partial settlements or "true-ups" in margin requirements like futures – such that the parties do not exchange additional property securing the party at gain and the entire unrealized gain or loss builds up while the contract is open.