• Journal of Korean Society of Industrial and Systems Engineering
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• v.40 no.1
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• pp.50-56
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• 2017

The IRR (internal rate of return) is often used by investors for the evaluation of engineering projects. Unfortunately, it is widely known that it has serial flaws. Also, External rate of returns (ERRs) such as ARR (Average Rate of Return) or MIRR (MIRR, Modified Internal Rate of Return) do not differentiate between the real investment and the expenditure. The PRR (Productive rate of return) is faithful to the conception of the return on investment. The PRR uses the effective investment instead of the initial investment. In this paper, we examined two cases of the engineering project. the one is a traditional engineering project with financing activity, another is the project with R&D. Although the IRR has only one value, it overestimates or underestimate profitabilities of Engineering Projects. The ARR and the MARR assume that a returned cash reinvest other projects or assets instead of the project currently executing. Thus they are only one value of a project's profitability, unlike the IRR. But the ARR does not classify into the effective investment and non-investment expenditure. It only accepts an initial expenditure as for an investment. The MIRR also fails to classify into the investment and the expenditure. It has an error of making a loss down as the investment. The IRR works as efficiently as a NPW (Net Present Worth). It clearly expresses a rate of return in respect of an investment in an engineering project with a loan. And it shows its ability in an engineering project with a R&D investment.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.38 no.3
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• pp.95-99
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• 2015

The IRR(internal rate of return) is often used by investors for the evaluation of engineering projects. Unfortunately, it has serial flaws: (1) multiple real-valued IRRs may arise; (2) complex-valued IRRs may arise; (3) the IRR is, in special cases, incompatible with the net present value (NPV) in accept/reject decisions. The efforts of management scientists and economists in providing a reliable project rate of return have generated over the decades an immense amount of contributions aiming to solve these shortcomings. Especially, multiple internal rate of returns (IRRs) have a fatal flaw when we decide to accep it or not. To solve it, some researchers came up with external rate of returns (ERRs) such as ARR (Average Rate of Return) or MIRR (MIRR, Modified Internal Rate of Return). ARR or MIRR. will also always yield the same decision for a engineering project consistent with the NPV criterion. The ERRs are to modify the procedure for computing the rate of return by making explicit and consistent assumptions about the interest rate at which intermediate receipts from projects may be invested. This reinvestment could be either in other projects or in the outside market. However, when we use traditional ERRs, a volume of capital investment is still unclear. Alternatively, the productive rate of return (PRR) can settle these problems. Generally, a rate of return is a profit on an investment over a period of time, expressed as a proportion of the original investment. The time period is typically the life of a project. The PRR is based on the full life of the engineering project. but has been annualised to project one year. And the PRR uses the effective investment instead of the original investment. This method requires that the cash flow of an engineering project must be separated into 'investment' and 'loss' to calculate the PRR value. In this paper, we proposed a tabulated form for easy calculation of the PRR by modifing the profit and loss statement, and the cash flow statement.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.42 no.1
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• pp.137-142
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• 2019

There are two methods for evaluating two or more mutually exclusive projects. One is a total investment approach and the other is an incremental investment approach. The former can rank projects by the criterion of the net present value, but the latter can't do it. An incremental investment approach is only possible when all pairwise alternatives are compared. Thus an incremental investment approach is superior in ranking them over an incremental investment approach. To do so, a principle of comparison must be established. Comparisons of profitability are reasonable when operating the same amount of investment over the same period of time. One principle is that all projects are invested in the largest of the projects. Another principle is that all projects are invested during the longest project life of the projects. In this paper, even if the principle is followed, it will be shown that the external rate of return fails to rank them. However, the productive rate of return criterion would prove to be able to rank them like the net present value standard, provided that the principle of comparison is kept. In addition, rate of returns can be assessed so that all mutually exclusive projects can be compared at once, such as on the criterion of the net present value. That is, it can be also compared with many other returns, such as the profit rates on financial investments or real investments.

• Journal of the Korea Safety Management & Science
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• v.15 no.3
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• pp.151-161
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• 2013

This paper proposes a strategic model of linkage between productivity metrics and financial accounting metrics to properly evaluate the financial effect of TPM activities and the business performance. This linkage strategy provides a connection tool for clear communication between factory-level and headquarters that the metrics proposed by this paper ultimately improves a quality of support from the management by receiving the factors required for productivity activities in the practical field. This factor includes such as equipment, raw materials and labors. Here, we propose that chain reaction models using break down structure of productivity metrics and financial metrics enhance the knowledge sharing of KPI (Key Performance Indicator) which generally tend to create oversimplified communication between management in headquarters and employees in the practical fields. The productivity metrics include OEE(Overall Equipment Effectiveness) of TPM (Total Productive Maintenance), OLE (Overall Labor Effectiveness) of PAC(Performance and Analysis and Control) activities, and OYE (Overall Yield Effectiveness) of TMM(Total Material Management) activities. The financial accounting metrics include ROE(Return on Equity), ROA(Return on Asset), and AVR(Added-Value Rate). The suggested chain reaction model selects the financial metrics as initial stage and branch down until final stage of productivity metrics. When demand exceeds supply, an ideal speed rate, the lean OEE strategy can be initially applied to reduce the gap between the demand and supply, then apply variable costing to estimate correct amount of operating profit. In addition, the paper presents a new type of model for linkage between financial accounting metrics including CAPEX(Capital Expenditure), OPEX(Operating Expenditure), EVA(Economic Added Value), DCL(Degree of Combined Leverage), and TPM productivity activities including AM(Autonomous Maintenance), PM(Preventive Maintenance), MP(Maintenance Prevention) and QM(Quality Maintenance). In order to support the evidence of proposed linkage strategy, a case analysis on 52 projects from national TPM contest from 2011 to 2012 is analyzed. The case presents the classification of CAPEX and OPEX activities from TPM, and proposes the correct implementation of financial effect for TPM projects.

• Journal of Forest and Environmental Science
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• v.25 no.1
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• pp.35-41
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• 2009

Agroforestry combines agriculture and forestry technologies to create more integrated, diverse, productive, profitable, healthy and sustainable land-use systems. This study was performed in three union of Chhagalnaiya Upazila (Sub-district; administrative entity) under Feni district, Southern Bangladesh with a view to identify the tree resources, utilization pattern and economic return of major fruit and timber tree species. Information collected from a total of 45 households ranging from marginal, small, medium and large categories. Number of plant species increased with the increase of homestead area. A total of 39 plant species were recorded from the homegarden, of which 23 were fruit and 16 were timber tree species. Considerable number of vegetables was also planted under the shade of the homestead trees. The investment analysis showed that average benefit-cost ratios were greater than one, net present values were positive and internal rate of returns were more than 10%. Long term investment on horticulture and timber tree species is highly profitable if species like Swietenia mahagoni and Tectona grandis, Spondias pinnata, Syzygium cumini and Areca catechu were planted.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.10 no.2
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• pp.85-96
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• 2015

Korea is one of low-ranked countries in women's economic participation rate among OECD nations because well-educated females are not participating in economic activities. Regardless of current state of our society, opening a business is being considered as a effective method for job creation. Also, increasing the number of female business founders can lead to female job creation which promotes even growth of foundation and job creation and augments women's economic activity rate. Therefore, this study suggests the direction of foundation and inspires foundation factors and aims at increasing social re-participation through vitalization of business foundation by women in career discontinuity. For this study, I carried out a survey targeting career interrupted women who have attained entrepreneurial education using five- point scale by Likert and analyzed with SPSS Windows 18.0. The analysis set up 3 hypotheses with independent variables of psychological traits, entrepreneurial education and entrepreneurial environment and the dependent variable of entrepreneurial intention of the career interrupted women. Also, I looked if there is the modify effect when psychological traits and entrepreneurial education affect the entrepreneurial intention with entrepreneurial environment as a moderating variable. To summarize the positive analysis result, Firstly, all psychological traits, entrepreneurial education and entrepreneurial environment had similar positive affects on career interrupted women's entrepreneurial intention. Secondly, when psychological traits and entrepreneurial education affect the entrepreneurial intention, entrepreneurial environment had similar effects as a moderating effect. This study implies that psychological traits, entrepreneurial education and entrepreneurial environment are all important for the career interrupted women's entrepreneurial intention. There are so many women who are going through both professional experience and personal network's severance. Therefore, optimized entrepre neurship education must be provided to help those women return to economic activity considering their psychological traits. Additionally, we should put emphasis on producing the entrepreneurial environment that can positively convert others' perceptions and construct those women's personal network. There seems to be more productive information for the strategies which can induce those women's actual business foundation if the social problems of the women who have highly willing to open a business are treated in the future. Also, considering that psychological traits, entrepreneurial education and entrepreneurial environment all have effect on entrepreneurial intentions, there should be more related follow-up study on this.

• Korean Journal of Soil Science and Fertilizer
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• v.11 no.4
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• pp.283-295
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• 1979

A new Farmland Expansion and Development Promotion Law was enacted in 1975. This law authorizes the Government to undertake development within a declared "reclamation area", wherever the land owners are unable to do so. In order to give additional impetus to conversion of waste hilly land into productive farmland, these hilly land development projects were conducted as large scale scheme which include soil fertility improvements such as the application of lime and phosphate. Farmland Expansion and Development Promotion Corps has attempted to undertake annual farm surveys in order to obtain some information about hilly land agriculture and farming operations within the reclamation project areas since 1976. As survey data accumulates, more and more clear picture of hilly land farming come to appear and enable us to conduct in-depth study. Effects of such upland reclamation include converting of previously unproductive slopeland into cultivable farmland for lucrative and commercial farming or food production. Furthermore, idle or marginal resources such as farm labor, equipment and compost would be fully employed. Socio-economic effects would include increases in land value and attitude change of farmers. On the other hand the preservation of natural environments might be damaged to the some extend by the projects. As shown in Table 7, the average farm size increased from 3,156 pyeong($3.3m^2$) to 5,562 pyeong, a 76.2% increase. The proportion of small farms with less than I ha dropped from 59.8% to 34.4%, but that of the large farms over 2 ha rose from 13.1% to 32.0% (See Table 8). The survey results indicate that as the farming on reclaimed uplands become time-honored, the acreage devoted for food crop production decreases against the economic crop growing acreage (see Table 6). For example, in the case of uplands reclaimed in 1972, the ratio of food crop acreages decreased from 99.7% in 1972 to 62.5% in 1977, whereas that of economic crop acreages increased from 0.3% in 1972 to 37.5% in 1977. The government used to actively encourage the farmers to carry out food crop production in the reclaimed upland targting toward the realization of self-sufficiency in food grains. It is, however, apparent that the farmers did hardly take the government advises as far as their economic interest were concerned. Yield per 10a. of various crops from the reclaimed uplands by year were surveyed as seen in Table 12. On the average, barley production in the reclaimed areas achieved 83.3% of the average unit yield from the existing upland in its 5 th year. Soybean yields showed a modest increase from 64% in the first year to 95%, in the 5 th year. In contrast, economic crops such as red pepper, totacco and radish achieved their maximum target yields in 3 years from starting to cultivate on the reclaimed farms. In order to test the post economic viability, an economic analysis was performed for each of selected subprojects on the basis of the data obtained through survey. The average actual internal economic rate of return on upland reclamation investments was found to be 20.3% which exceeded other types of projects of land and water development such as tidal land reclamation, irrigation or paddy rearrangement. The actual IRRs of subcategories of upland reclamation projects varied from 17.9% to 21.4% depending upon the kinds of cropping system adopted in each reclaimed areas such as food, economic, fruit or forage crops.