BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The internal rate of return (IRR) is calculated by solving the NPV formula for the discount rate required to make NPV equal zero. This method can be used to compare projects of different time spans on the basis of their projected return rates.

Detailed explanation-2: -NPV Formula. Calculating net present value involves calculating the cash flows for each period of the investment or project, discounting them to present value, and subtracting the initial investment from the sum of the project’s discounted cash flows.

Detailed explanation-3: -Once you have your discount factor and discount rate calculated, you can then use them to determine an investment’s net present value. Add together the present value of all positive cash flows, subtracting the present value of negative cash flows. Applying the interest rate, you’ll end up with the net present value.

Detailed explanation-4: -September 2022) The net present value (NPV) or net present worth (NPW) applies to a series of cash flows occurring at different times. The present value of a cash flow depends on the interval of time between now and the cash flow. It also depends on the discount rate. NPV accounts for the time value of money.

Detailed explanation-5: -The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of a project zero. In other words, it is the expected compound annual rate of return that will be earned on a project or investment.