@junaidbasir2 i believe together with the animation they add a fun factor for learning finance (which isn't fun at all by itself). I, personally like it.
@saintelohim Why isn't this true? If IRR is the rate that sets NPV = 0, then any discount rate below will yield a positive NPV. Thus, a high IRR (40%) means there is a large range for the discount rate. Anything from ~1% to 39.9% will encourage you to do the project. However, a low IRR (10%) means there is a small range...thereby suggesting the project is only worthwhile if discount rates fall between ~1% & 9.9%. Right?? I think the video implies that 'valuable' is different from 'profitable'.
@professional80 I think he is comparing the NPV to the IRR. A project can have a higher IRR but a lower NPV. The project with the highest NPV should be chosen since it would add the most value.
@professional80 Subjectmoney is correct. check out cash flows A: -10(outflow at T=0) 5(inflow at T=1, and so on) 5 5 5 and B: -100 40 40 40 40, both discount at 10%. Who has a higher IRR? higher NPV? Also " If IRR is the rate that sets NPV = 0, then any discount rate below will yield a positive NPV. " is not true either. check out cash flow C: -100 500 -600. solve for IRR you get 100% and 200%. NPV is positive when discount rates are in between. Below 100% or above 200% yields negative NPV.
@professional80 also in some case, you can have multiple IRR's or don't have any IRR at all. So be careful when dealing with unconventional cash flows. You should have learn those in your corporate finance class though. good luck!
they could as well have mentioned the sh*tload of instances where the irr fools you into false investment desicions or can't even be calculated
hefferlegs1 2 weeks ago
why is there infuriatingly irritating music playing in the background of these videos meant for learning?
junaidbasir2 1 month ago
@junaidbasir2 i believe together with the animation they add a fun factor for learning finance (which isn't fun at all by itself). I, personally like it.
stathissim 2 weeks ago
Looks great, love the music and animation, great way to learn these definitions quickly :)
UnrealHelix 1 month ago
Nearly hopeless with Fin.Management till I find this serie of vids. Thank you so much!
ptquynhmaimarketer 2 months ago
Thanks a lot, short but really useful video, I was searching to learn it for some days but now I understand it completely.
saeedmar 3 months ago
cool video, what program did you make this with?
115breno 3 months ago
"The higher the IRR, the more valuable the project is." -- Not Always True!
saintelohim 5 months ago
@saintelohim Why isn't this true? If IRR is the rate that sets NPV = 0, then any discount rate below will yield a positive NPV. Thus, a high IRR (40%) means there is a large range for the discount rate. Anything from ~1% to 39.9% will encourage you to do the project. However, a low IRR (10%) means there is a small range...thereby suggesting the project is only worthwhile if discount rates fall between ~1% & 9.9%. Right?? I think the video implies that 'valuable' is different from 'profitable'.
professional80 2 months ago in playlist Personal Finance
@professional80 I think he is comparing the NPV to the IRR. A project can have a higher IRR but a lower NPV. The project with the highest NPV should be chosen since it would add the most value.
Subjectmoney 1 month ago
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@professional80 Subjectmoney is correct. check out cash flows A: -10(outflow at T=0) 5(inflow at T=1, and so on) 5 5 5 and B: -100 40 40 40 40, both discount at 10%. Who has a higher IRR? higher NPV? Also " If IRR is the rate that sets NPV = 0, then any discount rate below will yield a positive NPV. " is not true either. check out cash flow C: -100 500 -600. solve for IRR you get 100% and 200%. NPV is positive when discount rates are in between. Below 100% or above 200% yields negative NPV.
saintelohim 1 week ago
@professional80 also in some case, you can have multiple IRR's or don't have any IRR at all. So be careful when dealing with unconventional cash flows. You should have learn those in your corporate finance class though. good luck!
saintelohim 1 week ago
@saintelohim Yep, IRR is inferior to NPV.
professional80 1 week ago
Thank you.
trasheater2 5 months ago