What is Net Present Value and Internal Rate of Return? | NPV | IRR | PMP Exam

Net Present Value or NPV is the sum of the present value of all cashflows in a project. We select a project only if NPV is positive.
Internal Rate of Return or IRR is the inherent rate of return associated with the cashflows of a project. If IRR is the rate of return, the NPV equals zero. Calculated IRR is compared with a target rate. If IRR is more than the target, we undertake the project.
In this lesson we will cover:
What is Net Present Value?
How can we calculate Net Present Value?
What is Discounted Cash Flow?
What is IRR?
What is the purpose of the NPV and IRR methods?
How can we calculate IRR?
How do we use NPV and IRR for project selection?
Sample Problems with solutions
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#NPV #IRR #SunnySensei #DCF

[@DjNemes1s]

Brilliant video, really clearly explained step by step and the worked examples helped me apply the theory. Thanks :)

[@sunny.sensei]

Thank you for your nice words.

[@md.rashedulislamasif]

Thank you, sir. I quickly got what I am searching.

[@sunny.sensei]

You are welcome

[@atulyakhobragade1079]

amazing. Finally the concept is clear.

[@sunny.sensei]

Thanks for the feedback, Atul. I am glad you liked the lesson.

[@josierebellato250]

Thank you for the video. What if you are comparing vendor quotes for a 3 year project? And these quotes only have outflows? Is the job awarded to the vendor with the lower total present value?

[@pigslefats]

So what does NPV of 809 mean? It is maddening that you don't explain exactly what it means. All you say is accept