Originally published: 09/04/2018 15:34
Publication number: ELQ-16767-1

Internal Rate of Return

An informative video on IRR and how to calculate it.

by CA N Raja Natarajan
Chartered Accountant & Financial Management Teacher

investment finance npv irr net present value annuity internal rate of return trail and error cash inflows cash outflows

Description
Internal Rate of Return (IRR) is the discount rate at which the NPV (Net Present Value) of a project will be zero. It means the NPV of cash inflows will be equal to NPV cash outflows. But how is IRR useful in decision making? If IRR is greater than the cut off rate, then the result is positive but if the IRR is less than the cutoff rate, then the result is negative. If the IRR is greater than the cutoff rate, you can go ahead with the project, and if it is less you should not.

This video talks you through how to calculate IRR using two approaches:
1. Annuity Method
2. Trail and Error Method

This short video is informative, clear and easy-to-understand and will teach you how to calculate IRR using either of the two methods mentioned above.

Video length: 7 minutes 5 seconds

This Best Practice includes
1 Video File

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