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Lecture 15G - The IRR

0002114 irr 1634 the guess method is still useful in

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Unformatted text preview: IRR 16.34% The guess method is still useful in case the computer based guesses ever return an Error. I can always go back to the definition of IRR. Conclusion Conclusion Picking the bank loan instead of a credit Picking card to pay for his home repairs is like Herby investing at around 16.4% interest Herby I doubt Herby has many opportunities for doubt that kind of return that You can see how wise choices about You needed expenses can help you to accumulate wealth accumulate Do not confuse this to mean that Do spending money for anything makes you wealthy. wealthy. Interpreting IRR Interpreting The IRR represents the rate of interest The paid by the project (or the selection of the preferred cost scenario over its alternative) alternative) The IRR is compared to the Rate of The Return that the investor requires (or the interest rate for the investor’s other opportunities) opportunities) If the rate is greater or equal to the target If rate then GO FOR IT rate If not spit in the pot and walk away...
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