🔴 EASIEST IRR Internal Rate of Return, How to Calculate IRR Formula and Calculation (Idiot Proof!)

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  • Опубліковано 28 вер 2024
  • OMG wow! Soooo easy I subscribed here MBAbull.com for Internal Rate of Return or IRR.
    In advance of going deeper into this approach, we need to evaluate the definition of "Rate of Return" (with no "internal" yet). Rate of Return would be the "speed" you are going to earn back profit on an annual basis, every twelve months, endlessly, in contrast to an amount you in the beginning invest. With the intention that it can be compared to the invested bigger sum, this is written just like a percent (%).
    By way of example, if you invest 100 dollars, and you earn back 3 dollars per annum endlessly, then the "rate of return" is 3%. Trouble-free, is it not? But let us alter the situation somewhat. Suppose, on the same $100 investment previously mentioned, you will definitely make money for a couple of years... and not all in identical amounts in each year? And what if the money coming in will likely stop after a certain number of years? For instance, you are going to get $5 on your 1st year, possibly $8 on your 2nd year, $3 around the third year, and $95 during the fourth year (which could become a final year... so it's not ad infinitum). What is the rate of return now? As you can tell, on this most recent problem, it isn't really easy to find the percentage rate. This is because it's not as simple as in the initial case above for the reason that the annual cash flow is not just a standardizedsum (similar to the $3 in the initial situation above) and it's not without end. This percentage within this newest situation has become popularly known as Internal Rate of Return. Given that it is really not simple to get the percentage, we can easily declare it really is like "a hidden" percent... therefore the term "internal"... due to the reason that the word "internal" is similar to a formal way of expressing "hidden". How is the principle beneficial?
    If the IRR of your respective undertaking or business enterprise is less than your cost of debt or the total interest rate you would pay to your bank (in case you raise funds money coming from the bank to do the investment or plan), then it is a foul deal. Exactly why? Remember! Because if you will pay 3% to your bank to accomplish a venture or make an investment decision, and then it produces an IRR of only 2%, then you definitely lose 1%. Then again, when your IRR or Internal Rate of Return is above the percentage at which one would borrow from the bank to cover an investment or task, then it is a fine deal, as a result of the helpful "spread" in between your rate of return and cost of debt. Similarly, in case your IRR is the same thing as the interest one would pay to your bank, then you're break-even. This, in summary, is really a simple clarification of IRR. Note that in more difficult problems, you might weigh up your internal rate of return not simply to your cost of debt, but to you cost of equity or weighted average cost of capital or WACC instead. • 🔴 EASIEST IRR Internal...
    what is irr, the internal rate of return, what is internal rate of return, irr, internal rate of return, khan academy, investopedia

КОМЕНТАРІ • 270

  • @boyckie
    @boyckie 10 років тому +11

    I am sitting right now in my MBA Corporate Finance class and i cant get what the lecturer is teaching, listening to this simplify the concept, thanks a lot.

  • @MariaSandraC
    @MariaSandraC 7 років тому +3

    I used this video to review for corporate finance final exam.
    .. Hi Ajarn, and thanks. I passed that course. 😂👍🏼🙏🏻

    • @MBAbullshit
      @MBAbullshit  7 років тому

      @congrats in your passing corporate finance!

  • @mrnishitrulz
    @mrnishitrulz 12 років тому +3

    Brilliant!! I've done these concepts already but your way of teaching is phenomenal..

  • @MBAbullshit
    @MBAbullshit  13 років тому +21

    On another note... you'll notice professors explain this for hours, yet the students find them "too fast". I explain it in less than 30 min., yet some people find me "too slow". Know why? It just seems slow because I'm so clear. ;)

  • @stephano1990
    @stephano1990 12 років тому +2

    I wish I learned about this channel earlier than the evening before my finance exam!

  • @another_user_58
    @another_user_58 6 років тому +2

    thank you for this vid. I love how you pound the info into my head because I really need it but my brain refuses to grasp it. You're a life saver!

  • @MBAbullshit
    @MBAbullshit  12 років тому

    @tefanoooo I hope you fulfill your dream in life too tefanoo!! (But just as an honest disclosure: I do get some profit when people watch my premium videos. No pressure on anyone though, as I'm so glad even when people watch only my completely FREE videos and and click Like!)

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @Sankolo glad you're not confused anymore

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @Ismail you're welcome mate

  • @alainet
    @alainet 13 років тому +1

    Just a tip for part 3 of the video, to calculate the exact IRR by comparing 2 extreme %'s from PV (one positive and one negative),
    IRR = (Positive Value) + ( (Positive value / (Positive value -( Negative value)) * (different of % large - Small)) >> the result will be in % that will be the exact IRR.

  • @copperandbrass
    @copperandbrass 12 років тому

    I just mentioned it because if the exponent is 0, the result will always be 1. But you´re right, "uniformity-wise" it´s ok and easier to understand. Thanks for your video!

  • @MBAbullshit
    @MBAbullshit  12 років тому +2

    I just do that for "uniformity". Yes, the "smarter" guys can just omit the "negative zero" exponent

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @daniel you're welcome

  • @jainayikon
    @jainayikon 12 років тому

    Really great.....Those who got the chance to learn from you are really lucky..... How simply you explain it. Thank you...May god bless...

  • @MBAbullshit
    @MBAbullshit  14 років тому

    Thanks Romeo zashgal punjabian castelinop pam authenticminds big and all others. Got more videos coming up soon.. just gotta edit it and then upload it (can take hours to upload it on youtube). Cheers!

  • @tarshasleak
    @tarshasleak 8 років тому +1

    you make financial math for actuaries such a turn on......luh ya papi!

    • @MBAbullshit
      @MBAbullshit  8 років тому

      +tarshasleak glad you're turned on!

  • @Angad269
    @Angad269 10 років тому +1

    Simplicity is what this world needs for a more prominent global economy! People dont understand simple concepts, hence make a mess of things! Thankyou MBAbullshit.com

    • @MBAbullshit
      @MBAbullshit  10 років тому

      Angad Lota A simple thank you to you!

  • @fp1072
    @fp1072 7 років тому +2

    Man... I wish you were my professor!! taking finance now in Europe and I am lost until I watched this. Do you have anything on statistics?

    • @MBAbullshit
      @MBAbullshit  7 років тому

      I can be your professor here; but nope, no statistics

  • @joako78473739
    @joako78473739 8 років тому +1

    best financial channel ever

  • @IsmailAlansari
    @IsmailAlansari 11 років тому +2

    That was really helpful, thanks mate

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    great to have another subscriber!

  • @foreverraining1522
    @foreverraining1522 4 роки тому +2

    This is an AWESOME channel.

  • @danielrmoises5753
    @danielrmoises5753 11 років тому

    liked and subscribed , this is so easy but i have a hard time with my teacher , thanks for the video

  • @gaidianmaketa7504
    @gaidianmaketa7504 7 років тому

    I like the way you have simplified the concept , big up

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @ashish thanks for the subscribe!

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @Matt absolutely!

  • @ElvisVasquez-z2o
    @ElvisVasquez-z2o 7 місяців тому

    best explanation of IRR

  • @dulsafuminoro2688
    @dulsafuminoro2688 5 років тому +1

    Definitely, you are the best tutor!

  • @maxrecords6571
    @maxrecords6571 7 років тому

    I love this guy he makes all this bullshit make sense. I owe u.

  • @anita1love
    @anita1love 11 років тому

    can't believe I'm learning all this in one day and at uni I couldn't understand anything like my professor wasn't speaking English loool Thank you so much XD

  • @Captainziadkhan
    @Captainziadkhan 6 років тому

    you have just naaaaaailed it.. keeep it up boss...love u

  • @LakshithaPeiris
    @LakshithaPeiris 7 років тому

    This is NOT bullshit! this is awesome shit!

  • @hamdymostafa9240
    @hamdymostafa9240 12 років тому +1

    You are a scientist

  • @jeslyn4234
    @jeslyn4234 9 років тому +1

    LOL nice user name and your tutorials are so clear! thank you! *subscribes*

    • @MBAbullshit
      @MBAbullshit  9 років тому

      +Jeslyn Teh thanks for the subscribe!

  • @ethelganje6744
    @ethelganje6744 5 років тому +1

    you are amazing, so please help me with this problem.
    qA
    fertilizer dealer is considering the purchase of a new piece of equipment the
    will allow him to vary the application rates of fertilizer across a field. This
    new machine will cost him K15,000,000. He expects to increase his cash flows by
    K2,000,000 in year one, K2,500,000 in year two, and K3,500,000 in year 3 and
    K6,000,000 for the next 2 years. The estimated value of the machine at the end
    of 5 years is K8,500,000. Depreciation is calculated using the straight line
    method using a salvage value of K2,500,000 and a life of 5 years. The dealer
    pays tax at 30%.
    a)What
    is the payback period
    b)What
    is the simple rate of return using the average
    c)Evaluate
    the purchase of the new fertilizer application machine using
    i.Net
    Present Value (using an 8% cost of capital) over a 5 year time horizon
    ii.Internal
    Rate of Return.

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @Chrissy Welcome Welcome Welcome!

  • @MoesDesigns
    @MoesDesigns 11 років тому +1

    Just wana say great videos man! I was wondering, because I'm in the UK which Im not sure whether it makes a difference or not but I'm learning about Accounting Rate of Return (ARR)
    Is it the same as IRR? Because I typed ARR but IRR keeps coming.
    Thanks!

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    Welcome !!

  • @MBAbullshit
    @MBAbullshit  12 років тому

    Hey Zaynab, sorry, don't do homeworks coz get too many requests. Good luck though!

  • @dantevalenzuela8671
    @dantevalenzuela8671 2 роки тому

    Nice uploads. Thanks! Subscribed.

  • @BondRulz
    @BondRulz 11 років тому +1

    good explain ...... i should have used it earlier ..suscribed

  • @simpleliving3505
    @simpleliving3505 Рік тому

    Very nice explanation for beginner

  • @stigigeorge2506
    @stigigeorge2506 10 років тому +2

    great lectures!!

    • @MBAbullshit
      @MBAbullshit  10 років тому

      Stigi George great thank you!

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    LOL, I actually hope I was just being funny and not truthful, Hussein.

  • @dumbobg
    @dumbobg 10 років тому +2

    This channel rules! I was repeating to myself "F This! This subject is such bullshit!, then BAM I find this channel! I lost it in this quiet library man...

    • @MBAbullshit
      @MBAbullshit  10 років тому

      Glad you found this "F-in" channel Dumbo !

  • @spaikywiam
    @spaikywiam 10 років тому +1

    thank you alot...you are so great I'm so glad..........

    • @MBAbullshit
      @MBAbullshit  10 років тому

      wiam elzein glad you're glad!

  • @ramasahayamsaikrupalreddy9236
    @ramasahayamsaikrupalreddy9236 10 років тому +2

    Excellent sir

  • @Romeowasbleeding1
    @Romeowasbleeding1 14 років тому

    I love the idea behind the site! Going to tell all my friends about it. Keep the videos coming please!

  • @md.minhazulhaqacma3265
    @md.minhazulhaqacma3265 6 років тому

    Thanks for nice and easy presentation

  • @anassaifi3390
    @anassaifi3390 4 роки тому +1

    A company is planning to undertake a new project which will involve initial investment of rupees 50000.Life of project would be 5 years and CFAT of rupees 20000 per annum. Calculate IRR.
    Anybody solve this. I want this answer

  • @raghavraghavs
    @raghavraghavs 12 років тому

    You are awesome.. i'm subscribing

  • @bhowmicksunit
    @bhowmicksunit 11 років тому +1

    i wanna worship u my lord...

  • @KrishnaMoorthy-yi7ym
    @KrishnaMoorthy-yi7ym 10 років тому +1

    Thank you sir :) I'll be grateful to you

  • @GoKu-wu1bn
    @GoKu-wu1bn 6 років тому +2

    Good stuff!

    • @MBAbullshit
      @MBAbullshit  6 років тому

      Glad you found it good stuff!

  • @martafajlhauer8877
    @martafajlhauer8877 7 років тому +1

    You bet that better than my professor does :) I though that I don't understand this bullshit but thank you I do :)

  • @Azhandzul
    @Azhandzul 10 років тому +3

    Please tell me brother, How can I REPAY you.? I'm gonna cry for your effort. :')

    • @MBAbullshit
      @MBAbullshit  10 років тому +1

      Azhan Che Dzul LOL, if and only if you need more advanced tutorials, head over to my website and check out my premium videos; and if and *only if* you need them, you can purchase my premium plan (no pressure!) Cheers

  • @janua1998
    @janua1998 11 років тому

    Best teacher

  • @RohitSharma-cw2ii
    @RohitSharma-cw2ii 7 років тому +1

    i love the channel name

  • @hammadmansoor5209
    @hammadmansoor5209 8 років тому +3

    awesome and by no means bullshit.

    • @MBAbullshit
      @MBAbullshit  8 років тому

      +Hammad Mansoor awesome thanks!

  • @BruceWayne-pp6jk
    @BruceWayne-pp6jk 8 років тому

    Mr.X bought bonds of the face value of Rs.1000/- each at a discount of 10% on face
    value, bearing coupon@ 10% p.a., residual tenure for redemption at par being exactly 2
    years from the date of acquisition. What is the IRR?

  • @iashishkumar
    @iashishkumar 13 років тому +1

    Thanks You... ;)

  • @suganyaanand240
    @suganyaanand240 7 років тому

    How to calculate IRR if cashinflows are same

  • @Tacopartytube
    @Tacopartytube 10 років тому

    You should include the second part of that video.

    • @MBAbullshit
      @MBAbullshit  10 років тому

      Luke Stein Click on my username and you'll find Part 2 on my channel

    • @Tacopartytube
      @Tacopartytube 10 років тому +1

      i found it. thank you for the quick response.

  • @syedbaqar4299
    @syedbaqar4299 6 років тому

    U r awsm man love from Pakistan

  • @danielrmoises5753
    @danielrmoises5753 11 років тому

    thx for the video

  • @82816a1
    @82816a1 6 років тому

    upstart
    +8.19%
    Annual IRR

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    Hope they help you get rich LaBenz! LOL

  • @a1wonderland821
    @a1wonderland821 9 років тому

    Other than it taking years to explain EVERYTHING. The video was a great watched A**** would recommend.

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @Sunit lol I'll bless you with holy water

  • @immortality64
    @immortality64 10 років тому +2

    hey buddy your a genious, if i was you, I would put a price on my videos.

    • @MBAbullshit
      @MBAbullshit  10 років тому

      LOL thanks, but there is a price on my premium videos on my site; although everyone is welcome to watch my free videos as well, cheers

  • @FazeDaDon
    @FazeDaDon 11 років тому

    Where's the rest of the video

  • @adafridi
    @adafridi 4 роки тому

    How do you know that the money will come back to you?

    • @MBAbullshit
      @MBAbullshit  4 роки тому

      It is "assumed" as part of the case study...

  • @alanchen5492
    @alanchen5492 10 років тому +1

    you rock!

  • @abhigogoi2735
    @abhigogoi2735 7 років тому +1

    Impressive

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    LOL :p

  • @baseljabri3455
    @baseljabri3455 8 років тому +1

    cool

  • @hamzehzare9972
    @hamzehzare9972 7 років тому +1

    Bullshit you are the best

  • @ahlahanem5885
    @ahlahanem5885 11 років тому

    Thaaaaanx

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    science of B.S.... :p

  • @tigermancall
    @tigermancall 13 років тому

    @MBAbullshitDotCom i agree with u great vid cheers

  • @MBAbullshit
    @MBAbullshit  13 років тому

    @zenyricardo I wish I was ^^

  • @tusarimran5383
    @tusarimran5383 4 роки тому

    .

  • @JoshuaBradshawHill
    @JoshuaBradshawHill 11 років тому

    You speak way to slowly...

  • @duxexercitus4808
    @duxexercitus4808 9 років тому +65

    You definitely explained a WHOLE LOT better than my professor XD

    • @MBAbullshit
      @MBAbullshit  9 років тому +6

      +Dux Exercitus hope you're enjoying university!

    • @ph860109
      @ph860109 9 років тому +4

      +Dux Exercitus True!! Also much better than mine! My professor is talking bullshit, this video is talking English.

  • @MBAbullshit
    @MBAbullshit  12 років тому +2

    @naher87 Hello Naher! I'm happy to answer questions related directly to my video, and due to the high volume of questions I recieve, I don't answer personal homeworks. Anyway, as a short answer, mine is "because it's better than not calculating at all" LOL. Anyway, wish you luck with ACCA!

  • @rmkj6754
    @rmkj6754 9 років тому +6

    "i'm sure I've explained better"
    lol ur so modest :P
    Great Videos tho.. Thanks a lot.... :)

  • @MBAbullshit
    @MBAbullshit  13 років тому +1

    @iashishkumar hello Kumar. My mission is to help the difficult learners, as I too was one in the past. There are faster tutorials around and so called 'smarter' people may watch those instead of my page. Cheers! ;)

  • @Theauthenticmindset
    @Theauthenticmindset 14 років тому +3

    I agree, you did explain it WAY better than my instructor did.

  • @asquare10
    @asquare10 12 років тому +3

    Honestly you were right, I am taking a finance class and I totally depend on your videos because I seldom understand from my prof!

  • @wakka31298
    @wakka31298 11 років тому +10

    Honestly I have spent a semester in Finance class and I'm trying to figure out how to pass at this point. My teacher says it is a dry subject so he apologizes if we do not understand it. I'm soooooo thankful for your channel because I have learned more from watching your videos in maybe an hour or two than I have from my teacher all year! I hope my gratitude to you is enough reward for you saving my grade because it is about all I can offer you at this point. Subscribed, sharing, loving...

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    @YoxyNet LOL

  • @jcarter3238
    @jcarter3238 8 років тому +5

    Again... This is the third concept you've broken down perfectly. WIN!

  • @alirizvi748
    @alirizvi748 8 років тому +18

    Super presentation. You know how to teach. Professors don't

    • @MBAbullshit
      @MBAbullshit  8 років тому +1

      +Ali Rizvi a super thanks!

  • @InsightfulJourney123
    @InsightfulJourney123 9 років тому +6

    Amazing clear explanation!! THANK YOU!!! ^_^

  • @MBAbullshit
    @MBAbullshit  12 років тому

    I personally don't recommend using the tables, because they only work in certain "uniform" conditions. Using the actual formulas are so easy and quick anyway (see my super easy videos on that), so why bother with the table... ;)

  • @MBAbullshit
    @MBAbullshit  11 років тому

    Click the popup sign on the video which says "Click here for part 2" which brings you to my UA-cam channel which has Part 2. Or just click on my username that should also bring you there.

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @Mythili thankssss

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    @danielr thanks for the subscribe!

  • @MBAbullshit
    @MBAbullshit  11 років тому +1

    Thanks Hina!

  • @MBAbullshit
    @MBAbullshit  12 років тому +1

    @thisiseman LOL, lmao (not at your professor though, we've all been thru that). So funny the way you explained your story! Anyway, sure, watch the channel all you want and happy new year to you!