How to Calculate IRR (using trial and error)

This video shows how to calculate the IRR using trial and error.
The IRR (internal rate of return) is the rate of return that would result in an NPV (net present value) of zero for the project if that rate of return is used as discount rate. The IRR can be found using trial and error. This involves setting up an equation with the discounted cash flows equal to zero, and then solving for the value of "r" that makes the equation balance.-
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[@karennelson4108]

Hey Edsipra, many thanks for a straightforward and easy-to-work out video on IRR. It helped me solve this question in minutes. I really do appreciate it.

[@Edspira]

Glad it helped!

[@sarahmuslihah5921]

OMG THANK YOU i got it now

[@maryanqardan6521]

can u make cf with third year >?

[@bhataktiatma204]

liu

[@shyamsundarbhanu8993]

why have you choose 9%, you might have started with 1%, how can we assume nearest possible rate in trial and error method of calculating IRR

[@kelsymariealvarez8743]

I know this comment was from a year ago and you might have learned the answer already, but this was also my problem. I believe this person can assume better in which rate to use with continuous experience of trying to compute IRR.

[@sidhharthpm3042]

@@kelsymariealvarez8743 Usually we take 10% for computing this kind of problems and depending on the NPV we will change the rate further.

[@kelsymariealvarez8743]

@@sidhharthpm3042 oh that's a great tip. I'll definitely remember and try this.

[@athipkarnplumchit5089]

4:45 the I ARGH RARGHH haha all jokes aside thanks for the explanation great video

[@mentor1324]

AHHAHAAHAHA

[@hisokayitch8348]

Thank you for this! Much easier than trying interpolation method.

[@surajoberai]

what if we don't get NPV of zero by plugging any values of r? Let's say we get NPV of minus value at r=10% 4:18. Then what would be IRR ?

[@karennelson4108]

You can get a 0, I did. You really do need to shave down the numbers sometimes. For my calculation, my IRR was 13.585%!

[@futurecpalawyer6168]

@@karennelson4108 how do you get the decimals, does it take a lot of time?

[@cmsonata]

@@futurecpalawyer6168 well, by using calculator, u dont even need to try like the video, the calculator would get you an exactly result of IRR

[@futurecpalawyer6168]

@@cmsonata in a basic calculator?

[@midapita]

@@cmsonata how?

[@diwashpoudel9547]

How can we calculate approx yield to maturity while calculating IRR. Please reply

[@angelo4998]

how would you do if the second year was a negativ value?

[@Mrtompie09]

4:43 xD

[@Lokesh_Soni16]

Any short way to find r?

[@joncross8483]

solve function on a TI-89 or n-spire should work

[@mrmasrawy92]

any manual way?

[@Youbeentagged]

there is a formula for IRR, but you will have to google that

[@mastermangdqusai]

Nice man I will pass the exam because of you

[@Edspira]

Excellent!

[@johnnypike4630]

Thank you so much

[@damienatherley896]

Simple and very helpful

[@Alibeysuleimanoglu]

I love yaa

[@AishaBoodoo]

Kisisa

[@sudebayrak2705]

I just could focus on 4.46 part AYARARR :D ur great teacher thanks btw

[@nepsoldier8552]

Love you sirr

[@Edspira]

I appreciate the encouragement!

[@queennitta9659]

How do you find r when we have multiple cash flows for over 4 years??

[@ChenMinTCM]

Good explanation…better than college lecturer! ❤

[@alirezakhansari7764]

Very helpful videos! Would it be possible to meet you on Zoom?

[@michaelg275]

can you make this with linear interpolation

[@bloodymary9557]

Thank you so much ❤️

[@ndumisongcobo2562]

Wow thank you so much that was easy to grasp.

[@ibrahimrazak6432]

If you wat the npv equal to negative

[@Muhammedmanneh]

I'm sorry for what I did bro

[@sabaaslam4766]

From where we will find hurdle rate

[@LalaJi99]

Maksood Bhai kya mast kaam karta hai tum. Thankyou bolne ka tha,

[@amroalaa6549]

Thank you.

[@planetdelap2948]

Does anyone know why setting the NPV to 0 is important.

[@varunsingh9705]

IRR is the minimum rate of return an investor would expect (i.e. at what rate of return would the investor be able to recover at minimum his initial investment of $50,000) . Hence IRR gives you that rate at which your Cash flows when discounted over time would give you a return of atleast your investment. hence your NPV becomes 0. Any return above IRR should give you a profit

[@planetdelap2948]

@@varunsingh9705 Thank you. It makes sense now.

[@rachittyagiyoutube]

@@varunsingh9705 bhai any other way to calculate irr?

[@varunsingh9705]

@@rachittyagiyoutube yes... you can take the nth root of (future value/ present value)

[@varunsingh9705]

N would be the number of years of investment

[@brianboks878]

Thanks but you can also use alpha x as the rate, and equate the equation to 0, and shift solve using the sci calculator, 0.1 would be the answer😂.

[@abdullah5255]

Brian Tindogan bro please explain how I would use alpha.

[@brianboks878]

Just input the whole equation in your scientific calculator, press alpha, then press X as your unknown (Rate) and equate the whole equation to zero by pressing alpha, and then equal sign. And now press shift and press solve😂

[@abdullah5255]

Brian Tindogan how would you do that on a Casio fx 83GT Plus.

[@brianboks878]

Oh sorry, that model of scientific calc has no shift solve😞. I'm using fx 991ex.

[@gusti1021]

Stupid comment. We're trying to learn how to solve it through math calculations, not using a calculator. Anyone can just plug values in a machine, the important thing is knowing what you are doing.

[@remokays]

Thanks very much for helping me think outside of the square