Hi, I have a practical question to ask.We are preparing a project wherein the investment is INR 150,000,000/- The cashflows are for a period of 25 years and the IRR is 15%(approx). (This has been worked out using Excel spreadsheet) My question is how exactly do we tell the client in terms of real money, he will make if he invests the above referred amount on the project. To be more clear suppose it is assumed he invests the above amount at 15% IRR does the client get 22,500,000 per year(less taxes) for 25 years of the project life. So how do I explain to the client. Please let me know.
Tell your client that it is like depositing their money in a savings account. They can expect to get 15% interest on their money for the 25 year life of the project.
The difference is that part of their annual "dividend" will include the return of the capital invested. With a savings account they would get their invested capital back when they physically take it out and end their investment.
