Re: [office-comment] Statistical SUMMARY() function

[robert_weir@us.ibm.com]

Hi Sheldon,

From what I can gather the term "economic rate of return" has multiple 
meanings.  In IDB use, where it is abbreviated as EIR not ERR, it uses a 
calculation involving shadow pricing to account for economic opportunity 
costs.  To me this sounds like something that one would do in a model in a 
spreadsheet, not as a single spreadsheet function.  Consider:  each of 
your cash flows could involve an arbitrary discount based on what are 
essentially project-specific judgement calls as well as addition costs to 
reflect social or environmental costs.  Do you think these assumptions 
would make a cohesive spreadsheet function?  If so, what would the 
function look like?  What would its parameters be?

Regards,

-Rob

Sheldon Britton <sab_orion@verizon.net> wrote on 06/04/2008 03:33:26 PM:

> Hi Robert,
> 
> Thank you very much for the timely response and the opportunity to 
> raise the question.
> 
> From working experience I am now also taking the opportunity to 
> forward documentation (see attachment) which describes the 
> procedures for the return/computation of Economic Rate of Return 
> (ERR) values as distinct from those of the return/computation of 
> Internal Rate of Return (IRR) as defined in formula listings of 
> OpenOffice's Calc, IBM's Lotus 1-2-3, IBM's Lotus Symphony's 1.0 
> SpreadSheet et cetera et cetera.
> 
> Re: "So how to turn an IRR into an ERR? I suppose the joke answer 
> would be "Invest in sub-prime  mortgages"; Wow... (was that "ENRON" 
> or "sub-prime" ;-) ! 
> Response: Which better company to be with other than the one (IBM) 
> which now have the responsibilities for the Federal Housing Loans 
> origination port folio; and, beyond these let us look at the "
> services opportunities" (delivery solutions...) in the world's 
> energy and commodities markets (food...) among others in that IBM's 
> "Lotus Symphony" like "OpenOffice" can be freely obtained. $$$ :-D 
> 
> Also, "But seriously, my understanding is that Internal Rate of 
> Return, as we define it in OpenFormula, is the same as what some 
> practitioners call "Economic Rate of Return". 
> 
> The attached documentation which describes "Economic Rate of Return"
> employed by the Inter-American Development Bank ( http://www.iadb.org
> ) I am quite sure will undoubtedly provide some clarification and 
> further understanding about this issue.