Comments on: Financial Valuation Concepts – The Internal Rate of Return (IRR) http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/ Free online resource for financial modeling advice, tips and tricks Tue, 13 Jul 2010 17:29:24 +0000 hourly 1 http://wordpress.org/?v=3.0 By: v goel http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-13989 v goel Sat, 19 Jun 2010 06:04:43 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-13989 how to calculate IRR in a commercial venture of a luxury hotel. further how to take the terminal value in case Investor calculates the IRR based on the period upto which the money lend is repaid back i.e. if money is invested for a period of 7 years. Investor will calculate IRR on the basis of 7 years receipt. But the project still have terminal value. How to take that and calculate in such a scenario? Kindly deliberate. how to calculate IRR in a commercial venture of a luxury hotel. further how to take the terminal value in case Investor calculates the IRR based on the period upto which the money lend is repaid back i.e. if money is invested for a period of 7 years. Investor will calculate IRR on the basis of 7 years receipt. But the project still have terminal value. How to take that and calculate in such a scenario? Kindly deliberate.

]]> By: KEMI http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-10445 KEMI Thu, 08 Apr 2010 15:14:05 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-10445 question: what is the exit point for any given business? question: what is the exit point for any given business?

]]> By: esther racheal http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-9017 esther racheal Sun, 21 Feb 2010 08:04:03 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-9017 really helpfull.i have a problem with getting the real rate of return of a loan."a bank disburses a loan as follows;9million today,3 million and 2million at the end of year 2 and 4 respectively.the loan was paid in in 6 annual instalments of 2 million at the beginning of year 6.subsequent installments increase by 2 million each from the previous one.given a rate of inflation of 4.5% per annum during the period.what is the annual real rate of retun for this loan? really helpfull.i have a problem with getting the real rate of return of a loan.”a bank disburses a loan as follows;9million today,3 million and 2million at the end of year 2 and 4 respectively.the loan was paid in in 6 annual instalments of 2 million at the beginning of year 6.subsequent installments increase by 2 million each from the previous one.given a rate of inflation of 4.5% per annum during the period.what is the annual real rate of retun for this loan?

]]> By: Hari http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-8511 Hari Sun, 31 Jan 2010 07:38:21 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-8511 any one know about the detail of IRR calculation and NPV please advice.Thanks any one know about the detail of IRR calculation and NPV please advice.Thanks

]]> By: MVL http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-7856 MVL Sat, 09 Jan 2010 12:20:24 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-7856 any one know about the detail of IRR calculation? please advice.Thanks any one know about the detail of IRR calculation? please advice.Thanks

]]> By: finance projects http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-7068 finance projects Wed, 09 Dec 2009 17:32:52 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-7068 yes off course you have really made very good effort and i got new information about modified and dividend IRR that is really new and interesting to me yes off course you have really made very good effort and i got new information about modified and dividend IRR that is really new and interesting to me

]]> By: Jarvis B Alexander http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-6515 Jarvis B Alexander Sun, 08 Nov 2009 00:49:43 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-6515 I was terribilly confused with the exchange in comments between William Little and Financial Modeling Guide regarding the disagreement with the statement "the IRR assumes the cash flow from an investment or project ARE reinvested at the IRR, …" and the correction made “the IRR assumes the cash flow from an investment or project TO BE reinvested at the IRR”. I am relatively new to the study of DCF so I went on a mad search to understand the difference and why such a difference can lead to a misunderstanding of IRR and possible misuse. My initial thoughts were that whether it IS reinvested or assumed TO BE reinvested the end result is that at some time it will be reinvested and assuming a reinvestment at a rate higher than what is accually possible and/or dictated by the market can lead to a misleading IRR comparable to WACC. But I found an article that adds a much more academic explanation to William Little's point. http://findarticles.com/p/articles/mi_6765/is_4_8/ai_n31127178/?tag=content;col1 I was terribilly confused with the exchange in comments between William Little and Financial Modeling Guide regarding the disagreement with the statement “the IRR assumes the cash flow from an investment or project ARE reinvested at the IRR, …” and the correction made “the IRR assumes the cash flow from an investment or project TO BE reinvested at the IRR”. I am relatively new to the study of DCF so I went on a mad search to understand the difference and why such a difference can lead to a misunderstanding of IRR and possible misuse. My initial thoughts were that whether it IS reinvested or assumed TO BE reinvested the end result is that at some time it will be reinvested and assuming a reinvestment at a rate higher than what is accually possible and/or dictated by the market can lead to a misleading IRR comparable to WACC. But I found an article that adds a much more academic explanation to William Little’s point. http://findarticles.com/p/articles/mi_6765/is_4_8/ai_n31127178/?tag=content;col1

]]> By: Net Present Value – An Overview | Financial Modeling Guide http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-6254 Net Present Value – An Overview | Financial Modeling Guide Wed, 28 Oct 2009 06:01:17 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-6254 [...] When the project NPV is zero, the rate at that point of time is considered to be its Internal Rate of Return (IRR). [...] [...] When the project NPV is zero, the rate at that point of time is considered to be its Internal Rate of Return (IRR). [...]

]]> By: Delores Wright http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/comment-page-1/#comment-4941 Delores Wright Mon, 07 Sep 2009 15:06:45 +0000 http://www.financialmodelingguide.com/features/financial-valuation-concepts-the-internal-rate-of-return-irr/#comment-4941 what is each project internal rate of return? Year Project A Project B 0 $100,000 $100,000 1 32,000 0 2 32,000 0 3 32,000 0 4 32,000 0 5 32,000 200,000 each has a 11 percent what is each project internal rate of return?
Year Project A Project B
0 $100,000 $100,000
1 32,000 0
2 32,000 0
3 32,000 0
4 32,000 0
5 32,000 200,000

each has a 11 percent

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