07-07-2010, 07:49 PM
Abuzar saeen how r u?
well dear IRR is computed by the follwing steps
1)plot cash flows year wise
2)discount cash flow by any rate "x%" eg 10%
3) if present value is posative when discounted by X% above we will chose a rate higher than X% lets say 15% in order to bring the present value discounted at new rate NEGATIVE
4) now we have two rates and two values (one posative and one negative)
now put in the following formula to get IRR
IRR=a+{p/(p-n)}*(b-a)
a=lower rate
b=higher rate
p=posative value (value we got using lower rate)
n=negative value(value we got using higher rate)
abuzar hope your query solved )
Huma do u agree with my response ??
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Abuzar Qazi</i>
<br />Please guide me regarding the computation of iRR
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
well dear IRR is computed by the follwing steps
1)plot cash flows year wise
2)discount cash flow by any rate "x%" eg 10%
3) if present value is posative when discounted by X% above we will chose a rate higher than X% lets say 15% in order to bring the present value discounted at new rate NEGATIVE
4) now we have two rates and two values (one posative and one negative)
now put in the following formula to get IRR
IRR=a+{p/(p-n)}*(b-a)
a=lower rate
b=higher rate
p=posative value (value we got using lower rate)
n=negative value(value we got using higher rate)
abuzar hope your query solved )
Huma do u agree with my response ??
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Abuzar Qazi</i>
<br />Please guide me regarding the computation of iRR
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
