Calculate IRR

by Duty
(Gabs)

Should I accept this project?


$220,000 is invested in a project with cash flows of $28,000,$32,000,$36,000,$40,000 ,the project will be sold for $240,000 after 4 years. The required rate of return is 15%.

Answer:

Dee Reavis

Using our website software to calculate IRR, the IRR = 14.2%. You would reject the project because it is below your required return of 15%.

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IRR Cash Flows

by Para
(KSA)

if the investment takes 3 or more years and the cash generation starts from year 3 onwards, which will be treated as the base year investment for calculation of IRR?

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Mar 23, 2010
Discounted Cash Flows
by: Dee Reavis

The beauty of discounted cash flows is that it doesn't matter how long your investment takes. You would just keep the sign negative for each investment year. If you have positive cash flow in a year where you are making still making investment, then you would just use the net of the 2 numbers.

Example:

year investment revenue
0 100,000 0
1 150,000 0
2 100,000 50,000
3 0 75,000
4-15 0 90,000

The cash flow would then be:

year cash flow
0 -100,000
1 -150,000
2 - 50,000
3 75,000
4-15 90,000


You would only need to put the cash flow numbers into the Internal Rate of Return Calculator to get the IRR.



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Finding IRR On a Calculator

by Anjal
(NZ)

How do you calculate the IRR using a calculator? What is the formula for this?

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Nov 21, 2009
Using A Calculator To Find IRR
by: Dee Reavis

First you set up your math for finding the Net Present Value(NPV). Then you do the calculation with different discount rates or hurdle rates until NPV=0. When NPV=0 then IRR=discount rate.

The formula for IRR is this:

IRR=Discount Rate When NPV=0

The IRR is the discount rate of the NPV when the NPV is equal to 0.

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How to Calculate IRR

by Sandip
(Ahmedabad)

I want a formula for calculating the value of IRR.

Answer

There is no direct formula for calculating IRR return. It is found using an iterative process using NPV. The closest thing to a formula is the following:
If NPV=0 then IRR=discount rate used to calculate the NPV. So we calculate NPV with different discount interest rates, zeroing in on NPV=0 to find the IRR.

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IRR Calculation

by C. Yamuna
(Erode)

IRR Calculation

IRR Calculation

Suppose we have an investment opportunity that calls for a cash outlay at time "zero" of rs.18000 and is expected to provide cash inflows of rs.5600 at the end of the next 5 years. Do the irr calculation.

Answer

This is a simple application of the IRR Calculator click. As you can see from the picture the IRR = 16.8%.

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