AN APPRAISAL OF INTERNAL RATE OF RETURN ON CASH FLOWS OF PRIVATE CAPITAL INVESTMENT IN NIGERIA

This study was conducted to appraise internal rate of return on cash flows of private capital investment in Nigeria. To achieve this objective, research questions were raised, hypotheses were formulated and tested with the simple percentage, Pearson correlation test and multiple regression test; and relevant literatures were reviewed. The sample size for this study was 399 staff of Nigeria Agip Oil Company (NAOC) ranging from management staff, audit, finance, Quantity Surveying and project management, budgeting and control departments. Simple random sampling technique was used to select members of the sample frame. The questionnaire, which was administered to the respondents, was the major data collection instrument employed in this study. From the results of the analysis, the following findings were made: there is a significant relationship between IRR and Cash flow of Private capital investment in Nigeria. It clearly reveals that IRR increases private equity returns but does not reflect the annual yield on an investment of the underlying cash flows. IRR calculations can mislead investors who are trying to compare the returns of different fund managers. Furthermore the results revealed that internal rate of return (IRR) aid private capital investment in Nigeria to evaluate the desirability of investments or projects by recognizing the time value of money by using cash flows. The following recommendations were made: management of project organizations should ensure the use of discounted capital investment techniques, and allow financial managers free hand in investment/project evaluation and selection. Identified strategies for improving an effective use of IRR for investment analysis should be adopted by Project Organization in order to achieve the desired results of maximum returns on investment.