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how to caculate IRR, could u help me out

Asked by sfarooqui99

Posted in Interviews and Accounting

21 Jul 2008

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Answers (4)

  • Please see http://en.wikipedia.org/wiki/Internal_rate_of_return

    Umashankar S 22 Jul 2008

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  • If you want to calculate on Excel then it very easy. Just make cash flow and put initial investment iwth negative sign on start. and then apply formula in separate box i.e. =IRR(xx : xx) Please note, XX : XX is equal to first filed to last field of your projected cash flow and initial investment. If answer will be less that Required Rate of Return then reject the project orther wise proceed with it.

    Financial Analyst 23 Jul 2008

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  • IRR computation = Positive Discount Rate+(Positive NPV/Positive NPV- negative NPV) * Negative NPV discount rate-Positive NPV discount rate. Eg. 10% discount rate NPV 1200 and 15% discount rate -250 so IRR = 10% +(1200/1200- -250)*15-10 = 14.14%

    M Abdulhameed 25 Jul 2008

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  • IRR is a very poor measure of a projects value - it assumes that positive cash flows are reinvested at the same return as the IRR that the project generates - use NPV instead - also consider option value before undertaking investments

    stuart 25 Jul 2008

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