Net Present Value (NPV) and Internal Rate of Return (IRR)

Net Present Value (NPV) and Internal Rate of Return (IRR)

Abdulla introduces the concept of Net Present Value, or the NPV, and the Internal Rate of Return also known as the IRR.
Overview

Investments normally require upfront payments that lead to expected future benefits. Calculating net present value and internal rates of return are essential to determine projects that generate future cash flows. NPV finds the nominal value of a project while IRR finds the minimum required rate of return.

Key learning objectives:

  • What is NPV and what are its shortcomings?

  • What is an IRR?

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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