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
#wallstreetmojo, #IRR, #internalrateofreturn
For more details, you can refer to our article at - www.wallstreetmojo.com/intern...
Subscribe to Our Channel -
KZread ► / @wallstreetmojo
LinkedIn ► / mycompany
Facebook ► / wallstreetmojo
Instagram ► / wallstreetmojoofficial
Twitter ► / wallstreetmojo

Пікірлер: 46

  • @priyapillai3449
    @priyapillai34494 ай бұрын

    Thank you so much! I am so relieved I managed to complete my assignment with your clear explanation. Keep going! Well done.

  • @wallstreetmojo

    @wallstreetmojo

    3 ай бұрын

    Glad it helped!

  • @francoisandrieu8101
    @francoisandrieu8101 Жыл бұрын

    you are incredible thank you !!!

  • @pltcmod4425
    @pltcmod44255 ай бұрын

    Very clear explanation. Thank you !

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    🎁 Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @Sai-tek
    @Sai-tek Жыл бұрын

    Great Explanation

  • @fgb875
    @fgb8752 ай бұрын

    super, you refresh my memory, super thank you! very clear explanation you are a super teacher!

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @tarekalsherif57
    @tarekalsherif572 жыл бұрын

    Thank you so much for the clear explanation!

  • @wallstreetmojo

    @wallstreetmojo

    8 ай бұрын

    You are welcome

  • @shahriarchowdhury3014
    @shahriarchowdhury30142 жыл бұрын

    Very clear explanation. Thank you so much. Please share the excel file.

  • @digvijaychoudhari4128
    @digvijaychoudhari41282 жыл бұрын

    Keep going sir 👍👍

  • @chathuranganeelaka4222
    @chathuranganeelaka4222 Жыл бұрын

    Very clear explanation. Thank you so much.

  • @wallstreetmojo

    @wallstreetmojo

    11 ай бұрын

    You are welcome!

  • @anosh441
    @anosh441 Жыл бұрын

    WELL DONE BRO

  • @sabbrina78
    @sabbrina78 Жыл бұрын

    Good job

  • @sudeepm8096
    @sudeepm80962 ай бұрын

    Thank you very much!

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @user-we1xz3mo8b
    @user-we1xz3mo8b5 ай бұрын

    Awesome! Thank you.

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    🎁 Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @LalieB
    @LalieB3 ай бұрын

    Ver clear! thank you!

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    🎁Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @ripaltandel7634
    @ripaltandel7634 Жыл бұрын

    I am looking forward to learn portfolio management ? How portfolio gets managed in a large size firm ?

  • @ethanklivans403
    @ethanklivans403Ай бұрын

    effective pedagogy

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @mohitsingha210
    @mohitsingha21010 ай бұрын

    In case of negative cash flows where IRR can give misleading results, what tool can we use to overcome this?

  • @obasholamohammed5851
    @obasholamohammed5851 Жыл бұрын

    Thanks for the video. Kindly help do a video on how the projection can be made in reality

  • @wallstreetmojo

    @wallstreetmojo

    8 ай бұрын

    Appreciate your feedback, more content coming soon!

  • @parulsethi4421
    @parulsethi442110 ай бұрын

    You should make more videos like these on finance topics.

  • @wallstreetmojo

    @wallstreetmojo

    8 ай бұрын

    Appreciate your feedback, more content coming soon!

  • @Pinkword_993
    @Pinkword_993Ай бұрын

    Can you help me with my project management assignment ??

  • @chintanhasnani6656
    @chintanhasnani66562 жыл бұрын

    can you share the excel sheet

  • @jagadishstar2690
    @jagadishstar2690 Жыл бұрын

    There was a lot of clarity in the explanation.

  • @wallstreetmojo

    @wallstreetmojo

    8 ай бұрын

    Glad we're on the same page, cheers!

  • @muhammadasadullah827
    @muhammadasadullah827 Жыл бұрын

    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.

  • @edvilla4415
    @edvilla4415 Жыл бұрын

    WHAT IS THAT CASH FLOW? CASH FLOW FROM OPERATING, INVESTING OR FINANCING? OR NET CASH FLOW FOR ALL THE THREE.

  • @gokulnaththeboss08

    @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

    @kiranakbm7568

    9 ай бұрын

    Explain about DCF

  • @gokulnaththeboss08

    @gokulnaththeboss08

    9 ай бұрын

    @@kiranakbm7568 just reversal of compound interest formula

  • @ANA-db9yn
    @ANA-db9yn Жыл бұрын

    How do you reject a project returning 40% and 50% but you just accept 35% only ?! 🤔

  • @mohdsaafin1411
    @mohdsaafin141111 ай бұрын

    Can we have NCFF Video

  • @wallstreetmojo

    @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/

  • @user-er4yk2op7t
    @user-er4yk2op7t5 ай бұрын

    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?

  • @conradtatge3992
    @conradtatge3992 Жыл бұрын

    Sometimes I come in second to measure how the first did it.

  • @unclemose74
    @unclemose7410 ай бұрын

    Use board some time instead of excel

  • @wallstreetmojo

    @wallstreetmojo

    9 ай бұрын

    Thanks for sharing your perspective!