What is an Internal Rate of Return?

What is an Internal Rate of Return?

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Category:

Education

Tags:

• Internal
• Rate
• of
• Return
• IRR
• economic
• howto
• educational
• finance
• money
• stock
• market
• trading
• analysis
• mutual
• fund
• debt
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[professional80]

@saintelohim Yep, IRR is inferior to NPV.

[saintelohim]

@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!

[hefferlegs1]

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

[stathissim]

@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.

[junaidbasir2]

why is there infuriatingly irritating music playing in the background of these videos meant for learning?

[Subjectmoney]

@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.

[UnrealHelix]

Looks great, love the music and animation, great way to learn these definitions quickly :)

[professional80]

@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'.

[ptquynhmaimarketer]

Nearly hopeless with Fin.Management till I find this serie of vids. Thank you so much!

[saeedmar]

Thanks a lot, short but really useful video, I was searching to learn it for some days but now I understand it completely.