Internal Rate of Return (IRR) and Net Present Value (NPV)

# Internal Rate of Return (IRR) and Net Present Value (NPV)

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## Internal Rate of Return (IRR) and Net Present Value (NPV)

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1. Internal Rate of Return (IRR) and Net Present Value (NPV)

2. IRR and NPV

3. IRR and NPVHP 10B Keystrokes Clears registers One payment per year PV = -\$ 28,371 FV = \$ 50,000 FV in 5 years Solve for IRR

4. IRR and NPV

5. IRR and NPVHP 10B Keystrokes Clears registers One payment per year \$50,000 future value Discount rate = 15% FV in 5 years Compute present value Subtract \$28,371

6. IRR and NPV

7. IRR and NPVHP 10B Keystrokes Clears registers Monthly compounding PV = - \$28,371 Monthly pmt = \$445.66 96 months Compute IRR

8. IRR and NPV

9. IRR and NPVHP 10B Keystrokes Clears registers Monthly payments Monthly pmt = \$445.66 Annual discount rate = 10% 96 monthly payments Compute PV Subtract \$28,371

10. IRR and NPV

11. IRR and NPVHP 10B Keystrokes Clears registers Monthly payments PV = -\$96,000 Monthly pmt = \$1,028.61 FV = \$97,662.97 60 months Compute yield (IRR)

12. IRR and NPV

13. IRR and NPVHP 10B Keystrokes Clears registers Monthly payments Monthly pmt = \$1,028.61 FV = \$97,662.97 60 months of payments Discount rate = 13.1047% Compute PV Subtract \$96,000

14. IRR and NPV

15. IRR and NPVHP 10B Keystokes Clears registers One payment per year Initial CF = - \$100,000 1st CF = \$ 20,000 2nd CF = \$ 35,000 3rd CF = \$ 75,000 Compute yield (IRR)

16. IRR and NPV

17. IRR and NPVHP 10B Keystrokes Clear registers One payment per year Initial CF = - \$ 10,000 1st CF = - \$ 8,000 2nd CF = - \$ 5,000 3rd CF = \$ 15,000 4th CF = \$ 25,000 Discount rate = 10% Compute net present value

18. IRR and NPV

19. IRR and NPVHP 10B Keystrokes Clears registers One payment per year Initial CF = - \$ 92,725.60 1st grouped CF = \$ 10,000 Occurs three times 2nd grouped CF = \$ 15,000 Occurs twice 3rd CF = \$ 100,000 (once) Compute the yield (IRR)

20. IRR and NPV

21. IRR and NPVHP 10B Keystrokes Clear registers Monthly payments Initial CF = - \$98,000 1st grouped CF = \$791.38 Occurs 12 times 2nd grouped CF = \$850.73 Occurs 12 times 3rd grouped CF = \$914.54 Occurs 11 times 4th CF = \$107,491.18 (once) Discount rate = 13% Compute net present value