ECR Exam - IRR and NPV

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Please could someone give me a good explanation of IRR, I know that it gives the percentage at which the net present value would be 0 but I can't see how this is useful.<BR><BR>IRR has been explained as like a bank account, the higher the interest rate the better but where there are questions to state why it is used and what it actually means I don't have a good explanation.<BR><BR>If someone could give me a concise explanation to help me I would be very greatful.<BR><BR>Thanks<BR><BR>Liz<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam - IRR and NPV

    Have a look at this site might help to clear things up for you<BR><BR>http://www.managingvalue.com/methods_irr.html<BR><BR><BR>Regards<BR><BR>Eddy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam - IRR and NPV

    <BR>Thanks Eddy<BR><BR>I'll give it a read :-)<BR><BR>Liz
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam - IRR and NPV

    I had exactly the same question on IRR. It seems like a completely pointless exercise to me, and no matter how much I read about it, I still don't see the point. According to my tutor, we will quite possibly have to identify it in Monday's exam. Shouldn't be too hard as long as they don't want me to explain WHY it's used!

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