Internal Rate of Return (IRR) - Basics, Formula, Calculations in Excel (Step by Step)
Chapters
00:00 - Introduction
01:30 - What is Internal Rate of Return?
03:55 - Trial and Error Method to Find IRR
07:26 - Using IRR Function in Excel
09:27 - Understanding IRR Formula
15:00 - Using IRR to Compare Two Projects
17:45 - Uses of IRR
In this video, we will talk about the Internal Rate of Return or IRR, its formula, calculations, and uses.
What is IRR?
IRR is the discount rate at which a project’s returns become equal to its initial investment.
Formula for IRR
Find IRR when NPV = 0
NPV = CF0 + CF1/(1+IRR) + CF2/(1+IRR)^2..... = 0
Advantages of IRR:
It considers the time value of money
An easy-to-implement tool
The project’s potential is defined accurately by using IRR
Disadvantages of IRR:
Sometimes, it remains ineffective
It can be used only with NPV
Multiple values
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Пікірлер: 46
Thank you so much! I am so relieved I managed to complete my assignment with your clear explanation. Keep going! Well done.
@wallstreetmojo
3 ай бұрын
Glad it helped!
you are incredible thank you !!!
Very clear explanation. Thank you !
@wallstreetmojo
Ай бұрын
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Great Explanation
super, you refresh my memory, super thank you! very clear explanation you are a super teacher!
@wallstreetmojo
Ай бұрын
Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/
Thank you so much for the clear explanation!
@wallstreetmojo
8 ай бұрын
You are welcome
Very clear explanation. Thank you so much. Please share the excel file.
Keep going sir 👍👍
Very clear explanation. Thank you so much.
@wallstreetmojo
11 ай бұрын
You are welcome!
WELL DONE BRO
Good job
Thank you very much!
@wallstreetmojo
Ай бұрын
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Awesome! Thank you.
@wallstreetmojo
Ай бұрын
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Ver clear! thank you!
@wallstreetmojo
Ай бұрын
🎁Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/
I am looking forward to learn portfolio management ? How portfolio gets managed in a large size firm ?
effective pedagogy
@wallstreetmojo
Ай бұрын
Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/
In case of negative cash flows where IRR can give misleading results, what tool can we use to overcome this?
Thanks for the video. Kindly help do a video on how the projection can be made in reality
@wallstreetmojo
8 ай бұрын
Appreciate your feedback, more content coming soon!
You should make more videos like these on finance topics.
@wallstreetmojo
8 ай бұрын
Appreciate your feedback, more content coming soon!
Can you help me with my project management assignment ??
can you share the excel sheet
There was a lot of clarity in the explanation.
@wallstreetmojo
8 ай бұрын
Glad we're on the same page, cheers!
How if cash flows are on daily basis for one or two years? I calculated IRR through excel it was 196% I couldn't understand. Explain it plz in another video.
WHAT IS THAT CASH FLOW? CASH FLOW FROM OPERATING, INVESTING OR FINANCING? OR NET CASH FLOW FOR ALL THE THREE.
@gokulnaththeboss08
Жыл бұрын
It depends on project.if project is for operation then operating cash flow,if it for investment then investment cash flow
@kiranakbm7568
9 ай бұрын
Explain about DCF
@gokulnaththeboss08
9 ай бұрын
@@kiranakbm7568 just reversal of compound interest formula
How do you reject a project returning 40% and 50% but you just accept 35% only ?! 🤔
Can we have NCFF Video
@wallstreetmojo
6 ай бұрын
Thanks for reaching out! If you're keen on gaining insights from our industry experts and securing a certification, check out the details below. www.wallstreetmojo.com/all-courses/
Deep Seas Submarine must implement a new engine in its submarines to meet the needs of clients who desire quieter operation. Two designs, both technologically feasible, have been created, and Deep Seas wishes to know which one to pursue. Design 1 would require an up-front manufacturing cost of $15,000,000 and will cost $2,500,000 per year for 3 years to swap out the engines in all its current submarines. Design 2 will cost $20,000,000 up front, but due to a higher degree of compatibility will only require $1,500,000 per year to implement. MARR is 10 percent/year. Based on an internal rate of return analysis, determine which design should be chosen. I assume since cashflow is negative its impossible to calculate IRR agree?
Sometimes I come in second to measure how the first did it.
Use board some time instead of excel
@wallstreetmojo
9 ай бұрын
Thanks for sharing your perspective!