How to Calculate IRR (using trial and error)

This video shows how to calculate the IRR using trial and error.
The IRR (internal rate of return) is the rate of return that would result in an NPV (net present value) of zero for the project if that rate of return is used as discount rate. The IRR can be found using trial and error. This involves setting up an equation with the discounted cash flows equal to zero, and then solving for the value of "r" that makes the equation balance.-
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Пікірлер: 68

  • @karennelson4108
    @karennelson41083 жыл бұрын

    Hey Edsipra, many thanks for a straightforward and easy-to-work out video on IRR. It helped me solve this question in minutes. I really do appreciate it.

  • @Edspira

    @Edspira

    3 жыл бұрын

    Glad it helped!

  • @hisokayitch8348
    @hisokayitch8348 Жыл бұрын

    Thank you for this! Much easier than trying interpolation method.

  • @damienatherley896
    @damienatherley8963 жыл бұрын

    Simple and very helpful

  • @LalaJi99
    @LalaJi993 жыл бұрын

    Maksood Bhai kya mast kaam karta hai tum. Thankyou bolne ka tha,

  • @diwashpoudel9547
    @diwashpoudel95474 жыл бұрын

    How can we calculate approx yield to maturity while calculating IRR. Please reply

  • @shyamsundarbhanu8993
    @shyamsundarbhanu89933 жыл бұрын

    why have you choose 9%, you might have started with 1%, how can we assume nearest possible rate in trial and error method of calculating IRR

  • @kelsymariealvarez8743

    @kelsymariealvarez8743

    Жыл бұрын

    I know this comment was from a year ago and you might have learned the answer already, but this was also my problem. I believe this person can assume better in which rate to use with continuous experience of trying to compute IRR.

  • @sidhharthpm3042

    @sidhharthpm3042

    Жыл бұрын

    @@kelsymariealvarez8743 Usually we take 10% for computing this kind of problems and depending on the NPV we will change the rate further.

  • @kelsymariealvarez8743

    @kelsymariealvarez8743

    Жыл бұрын

    @@sidhharthpm3042 oh that's a great tip. I'll definitely remember and try this.

  • @sarahmuslihah5921
    @sarahmuslihah59215 жыл бұрын

    OMG THANK YOU i got it now

  • @bloodymary9557
    @bloodymary95574 жыл бұрын

    Thank you so much ❤️

  • @johnnypike4630
    @johnnypike46305 жыл бұрын

    Thank you so much

  • @angelo4998
    @angelo4998 Жыл бұрын

    how would you do if the second year was a negativ value?

  • @ndumisongcobo2562
    @ndumisongcobo25623 ай бұрын

    Wow thank you so much that was easy to grasp.

  • @ChenMinTCM
    @ChenMinTCM2 ай бұрын

    Good explanation…better than college lecturer! ❤

  • @mastermangdqusai
    @mastermangdqusai Жыл бұрын

    Nice man I will pass the exam because of you

  • @Edspira

    @Edspira

    Жыл бұрын

    Excellent!

  • @queennitta9659
    @queennitta965911 ай бұрын

    How do you find r when we have multiple cash flows for over 4 years??

  • @maryanqardan6521
    @maryanqardan65213 жыл бұрын

    can u make cf with third year >?

  • @athipkarnplumchit5089
    @athipkarnplumchit50893 жыл бұрын

    4:45 the I ARGH RARGHH haha all jokes aside thanks for the explanation great video

  • @mentor1324

    @mentor1324

    2 жыл бұрын

    AHHAHAAHAHA

  • @amroalaa6549
    @amroalaa65493 жыл бұрын

    Thank you.

  • @sabaaslam4766
    @sabaaslam47662 жыл бұрын

    From where we will find hurdle rate

  • @michaelg275
    @michaelg2753 ай бұрын

    can you make this with linear interpolation

  • @remokays
    @remokays2 жыл бұрын

    Thanks very much for helping me think outside of the square

  • @sudebayrak2705
    @sudebayrak2705 Жыл бұрын

    I just could focus on 4.46 part AYARARR :D ur great teacher thanks btw

  • @surajoberai
    @surajoberai3 жыл бұрын

    what if we don't get NPV of zero by plugging any values of r? Let's say we get NPV of minus value at r=10% 4:18. Then what would be IRR ?

  • @karennelson4108

    @karennelson4108

    3 жыл бұрын

    You can get a 0, I did. You really do need to shave down the numbers sometimes. For my calculation, my IRR was 13.585%!

  • @futurecpalawyer6168

    @futurecpalawyer6168

    2 жыл бұрын

    @@karennelson4108 how do you get the decimals, does it take a lot of time?

  • @cmsonata

    @cmsonata

    2 жыл бұрын

    @@futurecpalawyer6168 well, by using calculator, u dont even need to try like the video, the calculator would get you an exactly result of IRR

  • @futurecpalawyer6168

    @futurecpalawyer6168

    2 жыл бұрын

    @@cmsonata in a basic calculator?

  • @midapita

    @midapita

    Жыл бұрын

    @@cmsonata how?

  • @ibrahimrazak6432
    @ibrahimrazak6432 Жыл бұрын

    If you wat the npv equal to negative

  • @planetdelap2948
    @planetdelap29484 жыл бұрын

    Does anyone know why setting the NPV to 0 is important.

  • @varunsingh9705

    @varunsingh9705

    4 жыл бұрын

    IRR is the minimum rate of return an investor would expect (i.e. at what rate of return would the investor be able to recover at minimum his initial investment of $50,000) . Hence IRR gives you that rate at which your Cash flows when discounted over time would give you a return of atleast your investment. hence your NPV becomes 0. Any return above IRR should give you a profit

  • @planetdelap2948

    @planetdelap2948

    4 жыл бұрын

    @@varunsingh9705 Thank you. It makes sense now.

  • @rachittyagiyoutube

    @rachittyagiyoutube

    3 жыл бұрын

    @@varunsingh9705 bhai any other way to calculate irr?

  • @varunsingh9705

    @varunsingh9705

    3 жыл бұрын

    @@rachittyagiyoutube yes... you can take the nth root of (future value/ present value)

  • @varunsingh9705

    @varunsingh9705

    3 жыл бұрын

    N would be the number of years of investment

  • @Lokesh_Soni16
    @Lokesh_Soni165 жыл бұрын

    Any short way to find r?

  • @joncross8483

    @joncross8483

    4 жыл бұрын

    solve function on a TI-89 or n-spire should work

  • @mrmasrawy92

    @mrmasrawy92

    4 жыл бұрын

    any manual way?

  • @Youbeentagged

    @Youbeentagged

    4 жыл бұрын

    there is a formula for IRR, but you will have to google that

  • @nepsoldier8552
    @nepsoldier8552 Жыл бұрын

    Love you sirr

  • @Edspira

    @Edspira

    Жыл бұрын

    I appreciate the encouragement!

  • @alirezakhansari7764
    @alirezakhansari77646 ай бұрын

    Very helpful videos! Would it be possible to meet you on Zoom?

  • @brianboks878
    @brianboks8785 жыл бұрын

    Thanks but you can also use alpha x as the rate, and equate the equation to 0, and shift solve using the sci calculator, 0.1 would be the answer😂.

  • @abdullah5255

    @abdullah5255

    5 жыл бұрын

    Brian Tindogan bro please explain how I would use alpha.

  • @brianboks878

    @brianboks878

    5 жыл бұрын

    Just input the whole equation in your scientific calculator, press alpha, then press X as your unknown (Rate) and equate the whole equation to zero by pressing alpha, and then equal sign. And now press shift and press solve😂

  • @abdullah5255

    @abdullah5255

    5 жыл бұрын

    Brian Tindogan how would you do that on a Casio fx 83GT Plus.

  • @brianboks878

    @brianboks878

    5 жыл бұрын

    Oh sorry, that model of scientific calc has no shift solve😞. I'm using fx 991ex.

  • @gusti1021

    @gusti1021

    4 жыл бұрын

    Stupid comment. We're trying to learn how to solve it through math calculations, not using a calculator. Anyone can just plug values in a machine, the important thing is knowing what you are doing.

  • @AishaBoodoo
    @AishaBoodoo5 ай бұрын

    Kisisa

  • @Alibeysuleimanoglu
    @Alibeysuleimanoglu11 күн бұрын

    I love yaa

  • @Mrtompie09
    @Mrtompie092 жыл бұрын

    4:43 xD

  • @Muhammedmanneh
    @Muhammedmanneh Жыл бұрын

    I'm sorry for what I did bro

  • @bhataktiatma204
    @bhataktiatma2048 ай бұрын

    liu