Lots of exciting and helpful new videos coming up! Be sure to click the like button, subscribe and turn on notifications to ensure you don't miss anything. Now that you learned how the NPV and IRR concepts work, your next step is to understand the impact of various scenarios on the NPV and IRR outcomes: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
So happy to hear that, Ibsa Mohamed! That is wonderful. Thank you for commenting. I think you should watch the NPV IRR payback scenario video next to understand this even better :-) ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
@@nickyanna3571 Thank you! That is both a hilarious as well as saddening statement on the experiences of university education. Get your certificate and get out of there into the real world! ;-)
I can't.thank you more. I was in class and completely clueless what the lecturer was teaching. As a slower learner, you're really a blessing to us. Thank you so so so much ❤️
You're welcome, Clifton! I have a few more NPV and IRR examples for you in this video: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html and recently finished a video on the related topic WACC ua-cam.com/video/1O-DbtVueMw/v-deo.html
@@abidullahkhamosh2099 Hello Abidullah! Let me walk you through the formula to arrive at $117 in project B, then you can replicate the same calculation for the other projects A and C. The undiscounted cash flow in project B are Year0 ($1000) Year1 $600 Year2 $500 Year3 $300 Year4 $200. The discounted cash flows for those are are ($1000) + $600/1.2 + $500/1.44 + $300/1.728 + $200/2.0736. If that is still confusing, then watch the related video specifically on NPV: ua-cam.com/video/N-lN5xORIwc/v-deo.html
currently reviewing for my cma exam and i kind of struggling with this topic but you explained it in just 6 minutes and i can't thank you enough! you are a lifesaver!
Happy to help! I have a playlist for you with related topics like payback, discounted payback, WACC, etcetera: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
@@TheFinanceStoryteller Hey. Well explained. How did you get the cash inflows for each? How do you determine the value of each project and which to choose, besides comparing npv. Does a higher or lower irr rate matter ? As well as payback period ? Would you choose an early payback period project that offers a lower amount with a wacc of 12.5% payback of 1,5 years and net present value of 850 000 with irr of 11% or.... a project with a wacc of 12.5% at a period of 2.7 years and Npv of 1500 291 with irr of 19.26% and why ?
Omg thank you so much!! A lecture and multiple videos later, your video finally explained it thoroughly in under 4 mins. 3 years and a pandemic later your videos still teaching!!
Great to hear, Johanna! Yes, this video has been very successful, and I am happy that so many people found it useful to understand capital budgeting concepts. Here's the playlist with related terminology on WACC etcetera ua-cam.com/video/N-lN5xORIwc/v-deo.html
my dear friend this is one of the best ways you have explained these concepts , they don't explain this as good in universities and professional finance courses really kudos to you mate .
Thank you so much for the kind words, Kaustubh! I approach each and every video from the real world perspective. Please subscribe to the channel, and take a look at the NPV IRR WACC playlist for more related videos: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Happy to help! I can be your virtual teacher on UA-cam! Here is the link to a playlist with related videos like WACC: ua-cam.com/video/1O-DbtVueMw/v-deo.html
Excellent. The perfect video which cleared all my queries on NPV and IRR and provided a base on these concepts. Covered what is it and how to calculate it. Thanks for posting this awesome video.
Thank you, thank you, thank you for the very kind words! Happy you enjoyed it. Please tell all your friends and colleagues about it. ;-) Here's the link to two "bonus videos" on how to calculate NPV and IRR in Excel: NPV ua-cam.com/video/jQ_NDQ2qVVA/v-deo.html IRR ua-cam.com/video/L0JCg5TXudc/v-deo.html
Wow, thank you, that's a great compliment. Here's the link to the playlist with related concepts like WACC, crossover rate, etc ua-cam.com/video/N-lN5xORIwc/v-deo.html
Thank you for the kind words, Raul! Hope there are more videos on the Finance Storyteller channel that are useful to you. Please spread the word to friends and colleagues! :-)
@@abidullahkhamosh2099 35 came from calculating the future discounted cash flows of 333+278+231+193 which is equal to 1035 and subtracting this 1035 from the initial investment of 1000 and you got this 35. i hope this will help you.
Thanks! Great to hear that. I think you will enjoy the follow-up video on NPV IRR payback scenarios as well, for a deeper understanding: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
You're welcome! Great to hear that, Omar. I have videos for you on related topics like WACC as well ua-cam.com/video/1O-DbtVueMw/v-deo.html Please spread the word to fellow students!
Man. you are a great teacher! Many folks make it hard to understand using jargons and stuff. never understood 100% but now I have nailed it. Thanks so much!
Thanks for the kind words! Very happy to hear that! I have many more related videos on WACC, payback period, etcetera that could be helpful for you: ua-cam.com/video/N-lN5xORIwc/v-deo.html Please subscribe, and spread the word to fellow students!
Thank you for commenting! Wishing you all the best with your exam. Maybe the related video on WACC vs IRR can help you as well ua-cam.com/video/ZuH_q5crAWg/v-deo.html
Wow, thank you, Jenny! Please spread the word. Here is the link to my playlist with more capital budgeting content: ua-cam.com/video/N-lN5xORIwc/v-deo.html
I can't thank you enough about this video, the concept of NPV which I heard yesterday which the professor was not able to explain and left me confused are now solved for just six minute video. although your calculation of IRR is not clear but will use Excel as I know basics of Excel. thank you so much
Thank you for the compliments, Rayso! Yes, I agree I could have spent more time on IRR in this video. I made follow-up videos to go deeper into IRR, compiled in this playlist: ua-cam.com/video/aS8XHZ6NM3U/v-deo.html
Really explained well. I got in the first attempt. Before watching this video, I watched other videos, but I couldn't understand. Thank you for your efforts!!
You're welcome, Nilesh! Very happy to hear that. I think you will like the related video on NPV and IRR scenarios as well: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Glad it helped! Related videos on topic like WACC, and discounted payback can be found in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
Personally, I enjoy good videos regardless of the accent! ;-) But as you are asking, the accent is Dutch (i.e. from the Netherlands). I did spend a good amount of time delivering training in Abu Dhabi and Dubai, so had the pleasure of visiting the Middle East multiple times.
Thank you very much for the compliment. Related topics like WACC and payback period are discussed in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
The way how we solve it in business class way back in uni was a shortcut so after months, it was already forgoten. Thank you for explaning the basis of it. Def understand it now. 😊
Hey je bent Nederlands! Thanks, duidelijk uitgelegd, jammer dat ik nu pas je video zie ipv voor mijn tentamen. Gelukkig snap ik het nu wel een stuk beter voor het hertentamen!
Jazeker! Welkom! Beter laat dan nooit. ;-) Veel succes met je hertentamen. Hier is de link naar een playlist met alle NPV/IRR gerelateerde termen (ook payback, WACC, etc.): ua-cam.com/video/N-lN5xORIwc/v-deo.html
@@Zwart-in6vc Dat draait om wat je als input neemt, en wat als output. Kort samengevat in het Engels: NPV Step 1) Determine nominal (undiscounted) cash flows , Step 2) Apply discount rate to calculate present values, Step 3) Calculate Net Present Value (NPV) by summing the discounted cash flows. IRR Step 1) Determine nominal (undiscounted) cash flows, Step 2) Set NPV at 0, Step 3) Calculate Internal Rate of Return (IRR) through trial and error, or Excel. Zie ook: ua-cam.com/video/aS8XHZ6NM3U/v-deo.html
That's why it's a good idea to specify when doing these calculations: what your assumptions are (what you know for sure and what you assume), and what could be the impact of things you are not sure of. After the investment has been made, when you know what the actual investment cash outflow was and the actual benefits start coming in, it's advisable to check (with hindsight) whether the original assumptions were correct, and learn from any variances.
@@TheFinanceStoryteller my opnion a model is never accurate. Even though u want to learn the next project will be different. Unless these are static projects and u do it often. I meant factors outside your control. Or just have the balls to invest even it it looks financial negative. If financial persons could decide wether a project or investment should go/no go the world would never step forward.
I think you are being overly negative about finance people, Mathijs. We are not in business to stop any and all investment projects from happening, we just want to help prioritize and rank the various projects from most attractive to least attractive, based on strategic, financial and EHS criteria. Narrowing down an overly long list of requests for CapEx budget to the ones we want to fund, and then go ahead to build and grow.
@@TheFinanceStoryteller Hi. I self have a Finance audtor education. But since Im working in the ICT industry and follow companies my opinion has been strengthen. I acknowledge good finance is very important. But engineering and entepreneur is much more crucial for having succes in business. Finance is just an outcome of good/bad business. Thats just my opinion. Keep up the good work in educating finance ppl.
Good to hear that. Glad it was helpful! Videos on related topics like WACC and discounted payback are available in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
Glad to hear that, Abheran! Related concepts like WACC, payback period and crossover rate are covered in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Thank you, Rummana! Happy to hear that. And well done searching for additional information to expand what was covered in class! I think you will like my NPV/IRR scenarios video as well that covers these concepts with more examples: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
My pleasure! Related concepts like WACC are discussed in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB Please spread the word to friends and colleagues.
Glad you liked it, Janifah! Thank you for watching and commenting. My follow-up video on NPV IR payback period scenarios might also be useful for you to watch: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Exactly, Olayinka! :-) Here's the link to related videos on capital budgeting that could be helpful for you as well ua-cam.com/video/1O-DbtVueMw/v-deo.html
Happy to help! Have a look at the related videos in the NPV IRR WACC playlist as well, there could be more useful stuff in there: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
Thank you very much, Ken! Great to hear that. I think you might also enjoy the related video on ROI versus payback: ua-cam.com/video/o4of1uNSRis/v-deo.html
Thank you so much for the clear explanation! I didn't quite get how we arrived at 35 for the NPV of project A though; since the NPV values of the following years are so large, if we add them together, how do we come to 35? Thank you so much!
Glad it helped! 35 came from calculating the present value of the future cash flows of 333+278+231+193 which is equal to 1035 and deducting the initial investment of 1000 from this, and you got this 35.
I appreciate your work on these videos and making it easier for others to understand. On the things I didn’t understand you answered those who had questions below. Great work!
Wonderful to hear that, Eric! Thank you for watching and commenting. The questions from viewers indeed helped to clarify some points. I have made a video on NPV and IRR scenarios as a follow-up: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
You're welcome, Raquel! The sequel to this video might also be useful for you. It covers various scenarios of investment level and benefits: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
@@bobbydreamsforu If you liked this video, then I recommend the related videos in the NPV IRR WACC playlist as well: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Thank you so much for your easy to understand lecture on NPV and IRR, they really saved me. Also can you tell me about why these two methods are used most often despite the existence of other evaluation methods. What are the differences of these two methods compared to other methods. Looking forward to your reply
Thank you very much for the kind words. The main reasons NPV and IRR are so widely used versus other methods are in my opinion: these methods consider the time value of money, and they consider cash flows over the entire life of the project. Payback period does neither of the above, while discounted payback does the 1st but not the 2nd. Profitability index is even slightly better than NPV, as it relates the payoff to the investment. Have a look at the various methods in this playlist: ua-cam.com/video/Md5ocNqKHq8/v-deo.html&pp=gAQBiAQB
Thank you for watching and commenting, Tomas! I made a follow-up video last week, playing around with several scenarios of investment and benefits. Hope you like that one as well! ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
You're welcome! Here is a link to my video on payback period ua-cam.com/video/FJjGi7gsK3A/v-deo.html ROI vs payback ua-cam.com/video/o4of1uNSRis/v-deo.html and my video on NPV IRR payback scenarios ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Interesting, thanks for the great explanation. These calculations of course are subject to assumptions, it's not always easy to know the exact cash flow you will get in year 3. Also, if there are ways to reinvest the cashflows from year 1 and year 2 back into the project, the returns could be higher...
think he meant to say if irr is 22% that's our breakevent point. the higher the discount rate past this wil provide a (negative npv), therefore you would prefer to go with a 1.2 project than a 1.22. the smaller number you divide by gives higher cash flows per year.. not the other way around.
The higher the discount rate (WACC), the lower (or possibly: the more negative) the NPV. Take a look at my video on IRR vs WACC to learn more: ua-cam.com/video/ZuH_q5crAWg/v-deo.html
![IRR vs. NPV - Which To Use in Real Estate [& Why]](/img/n.gif)
Lots of exciting and helpful new videos coming up! Be sure to click the like button, subscribe and turn on notifications to ensure you don't miss anything. Now that you learned how the NPV and IRR concepts work, your next step is to understand the impact of various scenarios on the NPV and IRR outcomes: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
😊
I can't thank you enough. I really can't. You explained to me 2 weeks worth of materials in less than 10. God bless you
So happy to hear that, Ibsa Mohamed! That is wonderful. Thank you for commenting. I think you should watch the NPV IRR payback scenario video next to understand this even better :-) ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
This single video has just taught me a full term of university coursework... Somebody remind me why I'm paying £9k a year
@@nickyanna3571 Thank you! That is both a hilarious as well as saddening statement on the experiences of university education. Get your certificate and get out of there into the real world! ;-)
I can't.thank you more. I was in class and completely clueless what the lecturer was teaching. As a slower learner, you're really a blessing to us. Thank you so so so much ❤️
You're welcome, Clifton! I have a few more NPV and IRR examples for you in this video: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html and recently finished a video on the related topic WACC ua-cam.com/video/1O-DbtVueMw/v-deo.html
I did not understand where does this 35, 117 en (46) come from? how has he this calculated
@@TheFinanceStoryteller thank you! I needed the WACC video and you made it. So timely.
@@cliftonaurelius3060 You're welcome, Clifton! Glad to hear that.
@@abidullahkhamosh2099 Hello Abidullah! Let me walk you through the formula to arrive at $117 in project B, then you can replicate the same calculation for the other projects A and C. The undiscounted cash flow in project B are Year0 ($1000) Year1 $600 Year2 $500 Year3 $300 Year4 $200. The discounted cash flows for those are are ($1000) + $600/1.2 + $500/1.44 + $300/1.728 + $200/2.0736. If that is still confusing, then watch the related video specifically on NPV: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Finally, explained in a way thats easy to understand! I suggest all PMP students to watch it!
🤦🏽♀️🥰🤘🏽
currently reviewing for my cma exam and i kind of struggling with this topic but you explained it in just 6 minutes and i can't thank you enough! you are a lifesaver!
Happy to help! I have a playlist for you with related topics like payback, discounted payback, WACC, etcetera: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
@@TheFinanceStoryteller thank u so much!
@@loveelykiim1001 Please share with your fellow students!
I'm italian and I was struggling with this for a course in english, thank you this video is very easy to understand!!!
Ciao! Very happy to hear that. Greetings from the Netherlands!
@@TheFinanceStoryteller Hey. Well explained. How did you get the cash inflows for each? How do you determine the value of each project and which to choose, besides comparing npv. Does a higher or lower irr rate matter ? As well as payback period ? Would you choose an early payback period project that offers a lower amount with a wacc of 12.5% payback of 1,5 years and net present value of 850 000 with irr of 11% or.... a project with a wacc of 12.5% at a period of 2.7 years and Npv of 1500 291 with irr of 19.26% and why ?
I’m American and I was struggling as well, I’m convinced finance is it’s own language and culture haha thanks for making this video!
Best NPV and IRR explanation I've ever heard. Thank you
Happy to hear that, Bongani! I have videos on related capital budgeting techniques for you in this playlist: ua-cam.com/video/ZuH_q5crAWg/v-deo.html
Omg thank you so much!! A lecture and multiple videos later, your video finally explained it thoroughly in under 4 mins. 3 years and a pandemic later your videos still teaching!!
Great to hear, Johanna! Yes, this video has been very successful, and I am happy that so many people found it useful to understand capital budgeting concepts. Here's the playlist with related terminology on WACC etcetera ua-cam.com/video/N-lN5xORIwc/v-deo.html
@@TheFinanceStoryteller thank you I will be needing it! Just started supply chain management last week. Thanks so much!!!
@@johannakenwood3359 You have come to the right place! Here are my thoughts on inventory management: ua-cam.com/video/DZhHSR4_9B4/v-deo.html
my dear friend this is one of the best ways you have explained these concepts , they don't explain this as good in universities and professional finance courses really kudos to you mate .
Thank you so much for the kind words, Kaustubh! I approach each and every video from the real world perspective. Please subscribe to the channel, and take a look at the NPV IRR WACC playlist for more related videos: ua-cam.com/video/N-lN5xORIwc/v-deo.html
I really can't thank you enough. I wish I had a teacher like you. God bless you. Amen
Happy to help! I can be your virtual teacher on UA-cam! Here is the link to a playlist with related videos like WACC: ua-cam.com/video/1O-DbtVueMw/v-deo.html
Excellent. The perfect video which cleared all my queries on NPV and IRR and provided a base on these concepts. Covered what is it and how to calculate it. Thanks for posting this awesome video.
Thank you, thank you, thank you for the very kind words! Happy you enjoyed it. Please tell all your friends and colleagues about it. ;-)
Here's the link to two "bonus videos" on how to calculate NPV and IRR in Excel:
NPV ua-cam.com/video/jQ_NDQ2qVVA/v-deo.html
IRR ua-cam.com/video/L0JCg5TXudc/v-deo.html
A semester in less than 10 minutes
Wow, thank you, that's a great compliment. Here's the link to the playlist with related concepts like WACC, crossover rate, etc ua-cam.com/video/N-lN5xORIwc/v-deo.html
I’m thinking of getting into accounting. Is this exaggerated? 😂
@@Earth_By_Board yeah its very exaggerated, its more like a week or 2
@@Earth_By_Board yes. It’s covered in one lesson for like 20 minutes.
Not really
I am loving your short and concise videos. They cover the key concepts and make them very clear!!
Thank you for the kind words, Raul! Hope there are more videos on the Finance Storyteller channel that are useful to you. Please spread the word to friends and colleagues! :-)
I did not understand where does this 35, 117 en (46) come from? how has he this calculated?
@@abidullahkhamosh2099 35 came from calculating the future discounted cash flows of 333+278+231+193 which is equal to 1035 and subtracting this 1035 from the initial investment of 1000 and you got this 35. i hope this will help you.
Without a doubt the best explanation of npv and irr on UA-cam. Thank you.
Thank you very much, Robert! Wonderful to hear that.
Just used this video for my pmp exam learning. Valueable information in just few minutes.... Thank you
Thanks! Great to hear that. I think you will enjoy the follow-up video on NPV IRR payback scenarios as well, for a deeper understanding: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
thank you so much for this video, I spent 3 Hr trying to understand this on the MBA module material, but now its cristal clear after seeing this video
You're welcome! Great to hear that, Omar. I have videos for you on related topics like WACC as well ua-cam.com/video/1O-DbtVueMw/v-deo.html Please spread the word to fellow students!
Man. you are a great teacher! Many folks make it hard to understand using jargons and stuff. never understood 100% but now I have nailed it. Thanks so much!
Thanks for the kind words! Very happy to hear that! I have many more related videos on WACC, payback period, etcetera that could be helpful for you: ua-cam.com/video/N-lN5xORIwc/v-deo.html Please subscribe, and spread the word to fellow students!
I don't know why, but I'm kinda addicted to the accent! lol thanks for the useful information! learned a lot!
Thanks for watching!
My brain hurts.
It’s easy bro
easiest explanation I've seen. thank you! you've helped me prepare for my exam!
Thank you for commenting! Wishing you all the best with your exam. Maybe the related video on WACC vs IRR can help you as well ua-cam.com/video/ZuH_q5crAWg/v-deo.html
Thank you so much, I'm writing tomorrow and I was just lost, everything is clear now. Thank you again x
You're welcome! :-) My follow-up video on WACC vs IRR might also be helpful for you: ua-cam.com/video/ZuH_q5crAWg/v-deo.html
I wish I had access to your videos during University. This is one of the best and clear explanations of NVP and IRR. Thank you
Wow, thank you, Jenny! Please spread the word. Here is the link to my playlist with more capital budgeting content: ua-cam.com/video/N-lN5xORIwc/v-deo.html
I can't thank you enough about this video, the concept of NPV which I heard yesterday which the professor was not able to explain and left me confused are now solved for just six minute video. although your calculation of IRR is not clear but will use Excel as I know basics of Excel. thank you so much
Thank you for the compliments, Rayso! Yes, I agree I could have spent more time on IRR in this video. I made follow-up videos to go deeper into IRR, compiled in this playlist: ua-cam.com/video/aS8XHZ6NM3U/v-deo.html
Really explained well. I got in the first attempt. Before watching this video, I watched other videos, but I couldn't understand. Thank you for your efforts!!
You're welcome, Nilesh! Very happy to hear that. I think you will like the related video on NPV and IRR scenarios as well: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
I did not understand where does this 35, 117 en (46) come from? how has he this calculated
_Your videos r_ *super.* _Concise and to the point of understanding._ *Tysm*
You're welcome, James! Thank you for watching and commenting.
Shortest and best way to understand the concept. Thanks
Glad it was helpful!
Thank you this is so simple for me to understand. Currently in my second year completing financial risk. Thanks!
Great to hear. Please spread the word! :-)
This video is very crucial to understand the core concept of AFM....thank you!
Thank you very much for the kind words! Related concepts like WACC are discussed in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html
I finally found your video, which helps me a lot!
Glad to hear it! More NPV, IRR, payback, WACC and related concepts discussed in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
This was so straightforward and easy thank you so much
Glad it helped! Related videos on topic like WACC, and discounted payback can be found in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
i will bet a $10000 if the presenter is not from arabic descent. the accent is absolutely nourishing and left your spirit.
Personally, I enjoy good videos regardless of the accent! ;-) But as you are asking, the accent is Dutch (i.e. from the Netherlands). I did spend a good amount of time delivering training in Abu Dhabi and Dubai, so had the pleasure of visiting the Middle East multiple times.
The best explanation. Thank you !
Thank you very much for the compliment. Related topics like WACC and payback period are discussed in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
The way how we solve it in business class way back in uni was a shortcut so after months, it was already forgoten. Thank you for explaning the basis of it. Def understand it now. 😊
Glad it helped! Here are some more examples to really "get" the deeper ideas behind the calculations ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Thank you for explaining this is a simple no fuss manner.
Yeah, let's get it done in 5 minutes, if we can, and move on to the next topic. 😎
Thank you so much! I was having a hard time to understand the topic, but you were amazing in clarifying it.
You're welcome! Please subscribe to the channel, I have related videos on topics like WACC and payback period as well.
Hey je bent Nederlands! Thanks, duidelijk uitgelegd, jammer dat ik nu pas je video zie ipv voor mijn tentamen. Gelukkig snap ik het nu wel een stuk beter voor het hertentamen!
Jazeker! Welkom! Beter laat dan nooit. ;-) Veel succes met je hertentamen. Hier is de link naar een playlist met alle NPV/IRR gerelateerde termen (ook payback, WACC, etc.): ua-cam.com/video/N-lN5xORIwc/v-deo.html
@@TheFinanceStoryteller wat is nou precies de relatie tussen de npv en IRR? Deze vraag krijg ik op mijn assessment
@@Zwart-in6vc Dat draait om wat je als input neemt, en wat als output. Kort samengevat in het Engels: NPV Step 1) Determine nominal (undiscounted) cash flows
, Step 2) Apply discount rate to calculate present values, Step 3) Calculate Net Present Value (NPV) by summing the discounted cash flows. IRR Step 1) Determine nominal (undiscounted) cash flows, Step 2) Set NPV at 0, Step 3) Calculate Internal Rate of Return (IRR) through trial and error, or Excel. Zie ook: ua-cam.com/video/aS8XHZ6NM3U/v-deo.html
The best breakdown i have seen.
Thank you, Cortney! That is wonderful to hear. More capital budgeting videos in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Very well explained! Thank you so much for the video!
Great to hear that, Ashwin! Thank you for watching, and welcome to the channel. :-)
Like the clear explanation. But this is a very scientific approach. There are so many factors which cant be moddeled.
That's why it's a good idea to specify when doing these calculations: what your assumptions are (what you know for sure and what you assume), and what could be the impact of things you are not sure of. After the investment has been made, when you know what the actual investment cash outflow was and the actual benefits start coming in, it's advisable to check (with hindsight) whether the original assumptions were correct, and learn from any variances.
@@TheFinanceStoryteller my opnion a model is never accurate. Even though u want to learn the next project will be different. Unless these are static projects and u do it often. I meant factors outside your control. Or just have the balls to invest even it it looks financial negative. If financial persons could decide wether a project or investment should go/no go the world would never step forward.
I think you are being overly negative about finance people, Mathijs. We are not in business to stop any and all investment projects from happening, we just want to help prioritize and rank the various projects from most attractive to least attractive, based on strategic, financial and EHS criteria. Narrowing down an overly long list of requests for CapEx budget to the ones we want to fund, and then go ahead to build and grow.
@@TheFinanceStoryteller Hi. I self have a Finance audtor education. But since Im working in the ICT industry and follow companies my opinion has been strengthen. I acknowledge good finance is very important. But engineering and entepreneur is much more crucial for having succes in business. Finance is just an outcome of good/bad business. Thats just my opinion. Keep up the good work in educating finance ppl.
Thank you for a clear concise and easy to understand vid 😁
Very happy to hear that! Thank you.
You deserve a cookie. Thank you very much for this explanation.
You're welcome! Opportunity to buy me cookies, a cup of tea, etc. at: ua-cam.com/channels/QQJnyU8fALcOqqpyyIN4sg.htmljoin ;-)
awesome explanation. Thank you !
Good to hear that. Glad it was helpful! Videos on related topics like WACC and discounted payback are available in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
Thank you very much for this video! It is very clear and easy to understand.
Glad to hear that, Abheran! Related concepts like WACC, payback period and crossover rate are covered in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
You made it all. Am loving it🔥👌
Yes! Thank you!
Thank you !
Made it easy to understand!!!
Happy to help! Discussion of related concepts in the videos of this playlist: ua-cam.com/play/PLKbmcnUUQMlkkCqQs7M_b6ktTDLITcRoG.html
omg you explained this so well... im so amazed!!!! THANK YOUUUUUUUUUU
Happy to help, Cherie!!! :-)
@@TheFinanceStoryteller Subscribed & liked. keep it up :-)!!!
Wonderful. :-) Please tell all your friends!
Great video. Thanks for explaining this with a simple example.
Glad it was helpful, John!
You made it all make sense! Thank you!
Wonderful to hear that!!! Thank you for watching and commenting. 😊
Excellent presentation, Thanks so much !!!
You are welcome! 😊 Please spread the word!
Dude your videos are really good.
I appreciate your assistance tremendously
Thank you, Kevin! That's awesome. Working on my next video right now. Happy to help!
Thank you for your easy and clear explanation.
You're welcome!!!! Thank you for watching and commenting.
Very clearly explained - thanks kindly!
You're very welcome!
Thank u so much sir..
Understood many things what didn’t in class....
Thank you, Rummana! Happy to hear that. And well done searching for additional information to expand what was covered in class! I think you will like my NPV/IRR scenarios video as well that covers these concepts with more examples: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
this helped so much, you're a saviour!
Happy to hear that, Saodat! Please spread the word!
thanks a lot! this is much clearer than lecture!
Great to hear that, Steven! Thank you for watching. I also cover related topics like WACC, crossover rate, and profitability index on my channel.
Another concise and well explained video. Thank you!
Thank you! Happy to hear you enjoyed it.
Thanks a lot for sharing, very educational and useful
My pleasure! Related concepts like WACC are discussed in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB Please spread the word to friends and colleagues.
This is a simple and great explanation. Thank you so much :)
Glad you liked it, Janifah! Thank you for watching and commenting. My follow-up video on NPV IR payback period scenarios might also be useful for you to watch: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Simple and good explanation. Thank you.
You're welcome! :-)
Concise and straight to the point. Thank you.
Exactly, Olayinka! :-) Here's the link to related videos on capital budgeting that could be helpful for you as well ua-cam.com/video/1O-DbtVueMw/v-deo.html
@@TheFinanceStoryteller Thanks alot.
@@olayinkaafun5469 You're welcome! Let me know if you think any topics are missing, I am always looking for good topics for new videos.
Wahoo I want to say thank you, your explanation is the best for me, really easy, 💖🙏thank you.
I will check all your content. 👍1,000
You're welcome 😊 I have related videos on WACC, profitability index, etc. as well for you: ua-cam.com/video/1O-DbtVueMw/v-deo.html
I finally understand the difference - thank you!!
Great to hear that, Todd! Happy to help. :-)
I did not understand where does this 35, 117 en (46) come from? how has he this calculated
I hate math and I'm sociology major but I understood this guy is a genius
Thank you, John! Happy to help. 😎
Perfect!!! I understand what NPV and IRR are!
Great to hear that! Thank you! :-)
I did not understand where does this 35, 117 en (46) come from? how has he this calculated
@@abidullahkhamosh2099 For NRV project A 35
333+278+231+193-1000=35
Same calculation for project B and C
Very nicely explained.Love your videos.
Thank you so much, Mamta! 🙂 That is nice to hear. Please spread the word!
Thank you bro you deserve a like
Happy to help! Have a look at the related videos in the NPV IRR WACC playlist as well, there could be more useful stuff in there: ua-cam.com/video/1O-DbtVueMw/v-deo.html&pp=gAQBiAQB
Thank you, this was a very clear explanation or IRR.
You're welcome! Happy to hear that. Related topics in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Clear and concise! Thank you!!!
Nice to hear that! Thank you, Angus!
so so lucid! THANK YOU
Thank you, Meena! Related topics are in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
very good explanation, thank you
Nice to hear that, Motalib! Thank you for watching and commenting.
Thank you very much for good explanation
You're welcome! :-)
you've made complicated things, simple.... well done✊
Thanks a lot! 😊 Very happy to hear that!
Thanks Sir, kindly make more videos.
Will do! You can expect one or two new ones per week in the near future.
@@TheFinanceStoryteller Sir, please make videos specially example related and crashing of stock market. really grateful, love from India
@@divinitytarot6 Good suggestion, thank you! I will add it to my list of potential topics.
You really do a great job explaining this. It had been years since I learned this in business school. Very good refresher
Glad it was helpful! I have related videos on payback period, WACC, etc. as well for you as a refresher: ua-cam.com/video/1O-DbtVueMw/v-deo.html
great explanation
Thank you!!! :-)
Excellent presentation. Concise and precise.
Thank you very much, Ken! Great to hear that. I think you might also enjoy the related video on ROI versus payback: ua-cam.com/video/o4of1uNSRis/v-deo.html
Thank you so much for the clear explanation! I didn't quite get how we arrived at 35 for the NPV of project A though; since the NPV values of the following years are so large, if we add them together, how do we come to 35? Thank you so much!
Glad it helped! 35 came from calculating the present value of the future cash flows of 333+278+231+193 which is equal to 1035 and deducting the initial investment of 1000 from this, and you got this 35.
@@TheFinanceStoryteller I had the same exact question. Thanks for this explanation.
Thanks clear explanation.
Great to hear that! Thank you! Please subscribe.
@@TheFinanceStoryteller Already done, Hit the bell icon too.
Very nicely explained :)
Thank you, Abbas! That's good to hear. :-)
Thanks a lot Philip De Vroe!! 😊
You're welcome, Poorvi Radhakrishnan! :-) Thank you for watching.
Very well explained
Thanks for liking
I appreciate your work on these videos and making it easier for others to understand. On the things I didn’t understand you answered those who had questions below. Great work!
Wonderful to hear that, Eric! Thank you for watching and commenting. The questions from viewers indeed helped to clarify some points. I have made a video on NPV and IRR scenarios as a follow-up: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Very helpful, thank you!
You're welcome, Raquel! The sequel to this video might also be useful for you. It covers various scenarios of investment level and benefits: ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Thank you so much...you’re the best
You're welcome, Tumi! Welcome to the channel, please subscribe.
Wow very clearance of concept. You make it in simply.
Thank you! Glad you enjoyed it. :-)
Nicely explained
Thank you, Owais!
WoW !! Thank you very much.
You're welcome, Satish! Glad to hear you liked it.
Your explanation is beyond wonderful ❤️ Thank you brother !!
@@bobbydreamsforu If you liked this video, then I recommend the related videos in the NPV IRR WACC playlist as well: ua-cam.com/video/N-lN5xORIwc/v-deo.html
This is sooo good!!!!
Thank you!!! More videos on related concepts like WACC in this playlist: ua-cam.com/video/1O-DbtVueMw/v-deo.html
Thank you so much, this is really helpful :-)
You're very welcome! Great to hear that.
Thank you so much for your easy to understand lecture on NPV and IRR, they really saved me. Also can you tell me about why these two methods are used most often despite the existence of other evaluation methods. What are the differences of these two methods compared to other methods.
Looking forward to your reply
Thank you very much for the kind words. The main reasons NPV and IRR are so widely used versus other methods are in my opinion: these methods consider the time value of money, and they consider cash flows over the entire life of the project. Payback period does neither of the above, while discounted payback does the 1st but not the 2nd. Profitability index is even slightly better than NPV, as it relates the payoff to the investment. Have a look at the various methods in this playlist: ua-cam.com/video/Md5ocNqKHq8/v-deo.html&pp=gAQBiAQB
Thanks, really enlightened video, thumps up!
Wow, thank you so much! Happy to hear that.
Yes, very good stuff.
Glad you enjoyed it, Michael!
Great video, understood much more with your video than with 3 lessons with my teacher hahaha
Glad it helped! I think you will also enjoy the related videos in this playlist: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Very clear. Thanks!
You're welcome, Angus! Happy to help. :-)
Pretty good, thank you!!!
Happy to hear that, Benedict! Take a look at my capital budgeting playlist for related topics: ua-cam.com/video/N-lN5xORIwc/v-deo.html
Thank you, very clearly explained!!!
Thank you for watching and commenting, Tomas! I made a follow-up video last week, playing around with several scenarios of investment and benefits. Hope you like that one as well! ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Very informative.
Glad it was helpful!
THANKS SIR, PLEASE MAKE MORE VIDEOS ON pay back period
You're welcome! Here is a link to my video on payback period ua-cam.com/video/FJjGi7gsK3A/v-deo.html ROI vs payback ua-cam.com/video/o4of1uNSRis/v-deo.html and my video on NPV IRR payback scenarios ua-cam.com/video/1ZTIwmn1Cm0/v-deo.html
Interesting, thanks for the great explanation. These calculations of course are subject to assumptions, it's not always easy to know the exact cash flow you will get in year 3. Also, if there are ways to reinvest the cashflows from year 1 and year 2 back into the project, the returns could be higher...
Excellent points, Peter! I agree with you. I tried to keep it as simple as possible in the video. ;-)
think he meant to say if irr is 22% that's our breakevent point. the higher the discount rate past this wil provide a (negative npv), therefore you would prefer to go with a 1.2 project than a 1.22. the smaller number you divide by gives higher cash flows per year.. not the other way around.
The higher the discount rate (WACC), the lower (or possibly: the more negative) the NPV. Take a look at my video on IRR vs WACC to learn more: ua-cam.com/video/ZuH_q5crAWg/v-deo.html