Relationship Between Accounting and the Internal Rate of Return Measures.

The article presents an analysis of the quantitative relationship between internal rates of return (IRR) and accounting rates of the same (ARR), mathematically challenging the universal validity of their correlations. Previous quantitative research on the subject is cited and re-evaluated in depth, pointing out mathematical holes, including their asymptotic analysis of cash flow and utilization of matrix theory. Several corrected formulas are provided, challenging previously asserted systematic correlations between IRR and ARR.