help with IRR & NPV

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Anyone got an easy way of explaing IRR - need help understanding NPV.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    help with IRR & NPV

    Sorry I can't help, but I am curious as to what IRR and NPV means please.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    help with IRR & NPV

    IRR is internal rate of return and compares the rate of return, calculated on the discounted cash flow (meaning that £1 today is going to be worth less than tomorrow, discounted cash flow allows for this) against the cost of capital (how much it's costing to borrow the money.<BR><BR>NPV is net present value which is looking at the future projections of the project and discounting it by what it has cost to borrow the money.<BR><BR>I think that is right but it took me a while to get my head round it (it's in my ACCA paper) so if I'm wrong please someone correct me before Dec 6th when I have my exam!!<BR><BR>annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    help with IRR & NPV

    For earlier answers to thes questions <BR>NPV<BR>http://www.aat.co.uk/forums/messageview.cfm?catid=18&threadid=2195&highlight_key=y<BR>IRR<BR>http://www.aat.co.uk/forums/messageview.cfm?catid=18&threadid=1956&highlight_key=y<BR><BR>In my opinion I recommend that you are able to calculate the NPV but the IRR is only likely to be examined in terms of your understanding of it in written terms rather than calculations<BR><BR>Sandy

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