Despite it being widely taught in business schools and practiced in the industry, you should think twice before using the internal rate of return as a criteria for making an investment decision.

Hosts and finance professors Jonathan Berk and Jules van Binsbergen are back to discuss why using the internal rate of return (IRR) as an investment decision rule is fundamentally flawed compared with the net present value (NPV).

They outline IRR’s problems including multiple or nonexistent solutions, failure to account for scale and timing, and structural vulnerability once financing/payment plans are allowed, enabling arbitrary or inflated IRRs.

Find All Else Equal on the web:

https://lauder.wharton.upenn.edu/allelse/

All Else Equal: Making Better Decisions Podcast is a production of the UPenn Wharton Lauder Institute through University FM.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

What value does a financial sector add to society? How would society function without a financial sector?

In this episode, hosts and finance professors Jonathan Berk and Jules van Binsbergen make the case that a competitive market financial sector is crucial to economic growth and the betterment of society.

Jonathan and Jules contend with the critiques they hear most often when it comes to free markets, breaking down the core purpose of a financial sector and why its value is not easily observable or necessarily fair. They also compare and contrast other financial systems, like command-and-control, and explain why those systems tend to fail.

Find All Else Equal on the web:

https://lauder.wharton.upenn.edu/allelse/

All Else Equal: Making Better Decisions Podcast is a production of the UPenn Wharton Lauder Institute through University FM.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All Else Equal is on Spring Break this week, so we’re revisiting one of our most popular episodes dealing with the question: How does one become a CEO? We’ll be back with new episodes in two weeks.

A lot has been written and said about CEOs and their compensation, but who are they really and how did they get there? According to the data, what are the most likely paths to become one? In this episode, hosts and finance professors Jonathan Berk and Jules van Binsbergen are joined by Dirk Jenter, Professor of Finance at the London School of Economics, for a fascinating discussion of CEOs, including the surprising truths about who rises to the rank of CEO and from where, as well as exploring the issue of CEO pay, and how it could be justified.

Find All Else Equal on the web:
https://lauder.wharton.upenn.edu/allelse/

All Else Equal: Making Better Decisions Podcast is a production of the UPenn Wharton Lauder Institute through University FM.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.