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Anthel

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BLIT2014 said:
Which finance unit? I have been told some are fairly tough!
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AFIN102 theres a quiz next week focusing on the first 2 weeks so it shouldnt be a complete nightmare. Everything is fine and dandy Im just stuck on IRR and the NPV concepts, jesus I cant crack my head around it.
 
BenHowe

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doing good but these questions for acst202 you gotta read carefully cause they have dates and day counts... @ when you have a calendar in your formula sheet
 
BenHowe

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Anthel said:
AFIN102 theres a quiz next week focusing on the first 2 weeks so it shouldnt be a complete nightmare. Everything is fine and dandy Im just stuck on IRR and the NPV concepts, jesus I cant crack my head around it.
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IRR and NPV are linked. For example, say project A has Cash Flows of -100 at time 0, 20 at time 1, ... , 20 at time 4 and 50 at time 5. What's the present value of these cash flows?



The value for i which makes the expression above equal to 0 is called the internal rate of return or IRR. It is the minimum return required by a project not to make a loss. So the net present value >= 0 if the rate of return or interest rate is >= the IRR. Make any more sense?
 
Anthel

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BenHowe said:
IRR and NPV are linked. For example, say project A has Cash Flows of -100 at time 0, 20 at time 1, ... , 20 at time 4 and 50 at time 5. What's the present value of these cash flows?



The value for i which makes the expression above equal to 0 is called the internal rate of return or IRR. It is the minimum return required by a project not to make a loss. So the net present value >= 0 if the rate of return or interest rate is >= the IRR. Make any more sense?
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Yeah, that actually does make sense. Thanks dude! If a question does ask you to find IRR is there any way of doing it analytically or do you have to use excel/finan calc?
 
ProdigyInspired

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Anthel said:
Yeah, that actually does make sense. Thanks dude! If a question does ask you to find IRR is there any way of doing it analytically or do you have to use excel/finan calc?
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You can do it through trial and error or the latter options you mentioned.
 
BenHowe

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Except for trivial or easy cases where there is only 1 cash flow with i in it or you can factorise i out via cubic or quadratic etc, no. Just use excel. You can use the IRR function or you can write it yourself like in the example attached. You use goal seek or solver to determine the rate. Also there is meant to be a minus sign to the left of the 100 :)Capture2.JPG
 
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Orwell

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Will MQ library be open tomorrow? Considering Easter and everything.
 
BLIT2014

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Does anyone know why E7B was evacuated today? Actual fire or just typical dodgy alarm system?
 
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