Investment Appraisal Explained

[@userk4730]

best video i have come across regarding this, especially NPVs. so easy to understand. i've been struggling to understand my lecturers all semester and this video is just perfect. now i believe i am ready for my exam in 2 days, thank you

[@KaplanUK-EN]

Glad to hear we have helped!

[@fowziaibrahim8407]

Very helpful and clear. Many thanks

[@alexandramela3931]

Thank you!! Was so helpful indeed

[@goobzzz___]

thank you bruh. been stuck on IRR for 2 hours 😭

[@spec6067]

this video is amazing!

[@lambiolamb]

Thank you!

[@younasiqbalqazi9102]

Brilliant, thanks

[@roselineudeji9892]

Thank you

[@mhprotic]

In clear terms what's the main difference between ARR and IRR then?

[@KaplanUK-EN]

Hi Mozammel, The ARR is the accounting rate of return, which shows the % return a company is getting from its investment, based on profits. The IRR is the internal rate of return, which instead shows the discount rate at which the project will break even (NPV = 0)

[@mawutorxorlornu5680]

@@KaplanUK-EN thank you Sir

[@salmaomar5423]

Thank you very much this has made so much sense now.

[@shaheeransari]

What does it mean that the IRR is not a 'real rate of return'? Does it hint that there is actually no return when we calculate IRR since it is just the point where NPV = 0?

[@KaplanUK-EN]

Yes, that's right. The IRR is more of a 'breakeven discount rate' than a measure of return, so its name often misleads people

[@hardikkothari5838]

ONE QUESTION FOR ROCE - WHILE CONSIDERING THE INVESTMENT IN THE DENOMINATOR SHALL WE CONISDER THE LOAN TAKEN'S AMOUNT AS WELL?

[@KaplanUK-EN]

Hi there! Yes. Capital employed is the long-term finance employed by the company to finance projects, so includes equity and non-current liabilities (including bank loans).

[@BishowroopKarki]

Thank you !