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ASTM E1057-15(2020)e1

Current Revision

Standard Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and Building Systems

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1.1 This practice covers a procedure for calculating and interpreting the internal rate of return (IRR) and adjusted internal rate of return (AIRR) measures in the evaluation of building designs, systems, and equipment.

1.2 The values stated in inch-pound units are to be regarded as standard. The values given in parentheses are mathematical conversions to SI units that are provided for information only and are not considered standard.

1.3 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.

1.4 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.


5.1 The IRR method has been used traditionally in finance and economics to measure the percentage yield on investment.

5.1.1 The IRR method is appropriate in most cases for evaluating whether a given building or building system will be economically efficient, that is, whether its time-adjusted benefits will exceed its time-adjusted costs over the period of concern to the decision-maker. However, it has deficiencies that limit its usefulness in choosing among projects competing for a limited budget.

5.2 The AIRR method is a measure of the overall rate of return that an investor can expect from an investment over a designated study period. It is appropriate both for evaluating whether a given building or building system will be economically efficient and for choosing among alternatives competing for a limited budget.

5.2.1 The AIRR method overcomes some, but not all, of the deficiencies of the IRR. The AIRR is particularly recommended over the IRR for allocating limited funding among competing projects.

SDO ASTM: ASTM International
Document Number E1057
Publication Date April 1, 2020
Language en - English
Page Count 12
Revision Level 15(2020)e1
Supercedes
Committee E06.81
Publish Date Document Id Type View
April 1, 2020 E1057-15R20E01 Revision
May 1, 2015 E1057-15 Revision
April 1, 2006 E1057-06E01 Revision
April 1, 2006 E1057-06 Revision
Oct. 1, 2004 E1057-04 Revision
April 10, 1999 E1057-99 Revision
Oct. 1, 2010 E1057-06R10 Reaffirmation