NPV and IRR explained

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  • เผยแพร่เมื่อ 6 ต.ค. 2018
  • Net Present Value and Internal Rate of Return, in short NPV and IRR. What is the purpose of the NPV and IRR methods of investment analysis, and how do you calculate NPV and IRR?
    The main idea of Net Present Value is very simple: time is money! NPV is the core term in #capitalbudgeting
    The net present value (or “discounted cash flow”) method takes the time value of money into account, by:
    - Translating all future cash flows into today’s money
    - Adding up today’s investment and the present values of all future cash flows
    If the net present value of a project is positive, then it is worth pursuing, as it creates value for the company.
    IRR is the discount rate at which the net present value becomes 0. In other words, you solve for IRR by setting NPV at 0.
    Related videos:
    Net Present Value explained (including present value and future value): • Net Present Value (NPV...
    Internal Rate of Return explained: • Internal Rate of Retur...
    NPV IRR Payback period scenarios: • NPV IRR Payback period...
    Time value of money • Time value of money ex...
    How to calculate #NPV in Excel • NPV in Excel
    How to calculate IRR in Excel • IRR in Excel
    Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers #financetraining in various formats: TH-cam videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!

ความคิดเห็น • 617

  • @TheFinanceStoryteller
    @TheFinanceStoryteller  4 ปีที่แล้ว +9

    Lots of exciting and helpful new videos coming up! Be sure to click the like button, subscribe and turn on notifications to ensure you don't miss anything. Now that you learned how the NPV and IRR concepts work, your next step is to understand the impact of various scenarios on the NPV and IRR outcomes: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @ibsamohamed740
    @ibsamohamed740 4 ปีที่แล้ว +84

    I can't thank you enough. I really can't. You explained to me 2 weeks worth of materials in less than 10. God bless you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +3

      So happy to hear that, Ibsa Mohamed! That is wonderful. Thank you for commenting. I think you should watch the NPV IRR payback scenario video next to understand this even better :-) th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

    • @nickyanna3571
      @nickyanna3571 4 ปีที่แล้ว +4

      This single video has just taught me a full term of university coursework... Somebody remind me why I'm paying £9k a year

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +5

      @@nickyanna3571 Thank you! That is both a hilarious as well as saddening statement on the experiences of university education. Get your certificate and get out of there into the real world! ;-)

  • @konstancyja82
    @konstancyja82 5 ปีที่แล้ว +47

    Finally, explained in a way thats easy to understand! I suggest all PMP students to watch it!

  • @rauljimenez5485
    @rauljimenez5485 5 ปีที่แล้ว +25

    I am loving your short and concise videos. They cover the key concepts and make them very clear!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว +3

      Thank you for the kind words, Raul! Hope there are more videos on the Finance Storyteller channel that are useful to you. Please spread the word to friends and colleagues! :-)

    • @abidullahkhamosh2099
      @abidullahkhamosh2099 4 ปีที่แล้ว

      I did not understand where does this 35, 117 en (46) come from? how has he this calculated?

    • @endangeredspecies5005
      @endangeredspecies5005 4 ปีที่แล้ว +3

      @@abidullahkhamosh2099 35 came from calculating the future discounted cash flows of 333+278+231+193 which is equal to 1035 and subtracting this 1035 from the initial investment of 1000 and you got this 35. i hope this will help you.

  • @cliftonaurelius3060
    @cliftonaurelius3060 4 ปีที่แล้ว +26

    I can't.thank you more. I was in class and completely clueless what the lecturer was teaching. As a slower learner, you're really a blessing to us. Thank you so so so much ❤️

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      You're welcome, Clifton! I have a few more NPV and IRR examples for you in this video: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html and recently finished a video on the related topic WACC th-cam.com/video/1O-DbtVueMw/w-d-xo.html

    • @abidullahkhamosh2099
      @abidullahkhamosh2099 4 ปีที่แล้ว +1

      I did not understand where does this 35, 117 en (46) come from? how has he this calculated

    • @cliftonaurelius3060
      @cliftonaurelius3060 4 ปีที่แล้ว +1

      @@TheFinanceStoryteller thank you! I needed the WACC video and you made it. So timely.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      @@cliftonaurelius3060 You're welcome, Clifton! Glad to hear that.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      @@abidullahkhamosh2099 Hello Abidullah! Let me walk you through the formula to arrive at $117 in project B, then you can replicate the same calculation for the other projects A and C. The undiscounted cash flow in project B are Year0 ($1000) Year1 $600 Year2 $500 Year3 $300 Year4 $200. The discounted cash flows for those are are ($1000) + $600/1.2 + $500/1.44 + $300/1.728 + $200/2.0736. If that is still confusing, then watch the related video specifically on NPV: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @AndresSanabriaMusic
    @AndresSanabriaMusic 3 ปีที่แล้ว +191

    A semester in less than 10 minutes

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว +5

      Wow, thank you, that's a great compliment. Here's the link to the playlist with related concepts like WACC, crossover rate, etc th-cam.com/video/N-lN5xORIwc/w-d-xo.html

    • @Earth_By_Board
      @Earth_By_Board 2 ปีที่แล้ว +3

      I’m thinking of getting into accounting. Is this exaggerated? 😂

    • @lilnine3293
      @lilnine3293 2 ปีที่แล้ว +5

      @@Earth_By_Board yeah its very exaggerated, its more like a week or 2

    • @lsansco3012
      @lsansco3012 2 ปีที่แล้ว +4

      @@Earth_By_Board yes. It’s covered in one lesson for like 20 minutes.

    • @alexnumssen2098
      @alexnumssen2098 2 ปีที่แล้ว

      Not really

  • @vikram_sekar
    @vikram_sekar 5 ปีที่แล้ว +12

    Excellent. The perfect video which cleared all my queries on NPV and IRR and provided a base on these concepts. Covered what is it and how to calculate it. Thanks for posting this awesome video.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว

      Thank you, thank you, thank you for the very kind words! Happy you enjoyed it. Please tell all your friends and colleagues about it. ;-)
      Here's the link to two "bonus videos" on how to calculate NPV and IRR in Excel:
      NPV th-cam.com/video/jQ_NDQ2qVVA/w-d-xo.html
      IRR th-cam.com/video/L0JCg5TXudc/w-d-xo.html

  • @loveelykiim1001
    @loveelykiim1001 3 หลายเดือนก่อน +3

    currently reviewing for my cma exam and i kind of struggling with this topic but you explained it in just 6 minutes and i can't thank you enough! you are a lifesaver!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 หลายเดือนก่อน +1

      Happy to help! I have a playlist for you with related topics like payback, discounted payback, WACC, etcetera: th-cam.com/video/1O-DbtVueMw/w-d-xo.html&pp=gAQBiAQB

    • @loveelykiim1001
      @loveelykiim1001 3 หลายเดือนก่อน +1

      @@TheFinanceStoryteller thank u so much!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 หลายเดือนก่อน

      @@loveelykiim1001 Please share with your fellow students!

  • @johannakenwood3359
    @johannakenwood3359 2 ปีที่แล้ว +2

    Omg thank you so much!! A lecture and multiple videos later, your video finally explained it thoroughly in under 4 mins. 3 years and a pandemic later your videos still teaching!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Great to hear, Johanna! Yes, this video has been very successful, and I am happy that so many people found it useful to understand capital budgeting concepts. Here's the playlist with related terminology on WACC etcetera th-cam.com/video/N-lN5xORIwc/w-d-xo.html

    • @johannakenwood3359
      @johannakenwood3359 2 ปีที่แล้ว +1

      @@TheFinanceStoryteller thank you I will be needing it! Just started supply chain management last week. Thanks so much!!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      @@johannakenwood3359 You have come to the right place! Here are my thoughts on inventory management: th-cam.com/video/DZhHSR4_9B4/w-d-xo.html

  • @jlee8
    @jlee8 2 ปีที่แล้ว +4

    I wish I had access to your videos during University. This is one of the best and clear explanations of NVP and IRR. Thank you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Wow, thank you, Jenny! Please spread the word. Here is the link to my playlist with more capital budgeting content: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @user-ps8ln5ke2f
    @user-ps8ln5ke2f 3 ปีที่แล้ว +1

    Man. you are a great teacher! Many folks make it hard to understand using jargons and stuff. never understood 100% but now I have nailed it. Thanks so much!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Thanks for the kind words! Very happy to hear that! I have many more related videos on WACC, payback period, etcetera that could be helpful for you: th-cam.com/video/N-lN5xORIwc/w-d-xo.html Please subscribe, and spread the word to fellow students!

  • @MundaneMuser
    @MundaneMuser 4 ปีที่แล้ว +21

    My brain hurts.

  • @robertbotta6536
    @robertbotta6536 4 ปีที่แล้ว +2

    Without a doubt the best explanation of npv and irr on TH-cam. Thank you.

  • @kaustubhnarkar9820
    @kaustubhnarkar9820 3 ปีที่แล้ว +4

    my dear friend this is one of the best ways you have explained these concepts , they don't explain this as good in universities and professional finance courses really kudos to you mate .

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Thank you so much for the kind words, Kaustubh! I approach each and every video from the real world perspective. Please subscribe to the channel, and take a look at the NPV IRR WACC playlist for more related videos: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @Hoshi_Poshi
    @Hoshi_Poshi 3 ปีที่แล้ว +14

    I'm italian and I was struggling with this for a course in english, thank you this video is very easy to understand!!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว +4

      Ciao! Very happy to hear that. Greetings from the Netherlands!

    • @starm5556
      @starm5556 3 ปีที่แล้ว

      @@TheFinanceStoryteller Hey. Well explained. How did you get the cash inflows for each? How do you determine the value of each project and which to choose, besides comparing npv. Does a higher or lower irr rate matter ? As well as payback period ? Would you choose an early payback period project that offers a lower amount with a wacc of 12.5% payback of 1,5 years and net present value of 850 000 with irr of 11% or.... a project with a wacc of 12.5% at a period of 2.7 years and Npv of 1500 291 with irr of 19.26% and why ?

    • @lukasrohler2074
      @lukasrohler2074 3 ปีที่แล้ว +2

      I’m American and I was struggling as well, I’m convinced finance is it’s own language and culture haha thanks for making this video!

  • @bonganimanini7748
    @bonganimanini7748 3 ปีที่แล้ว +2

    Best NPV and IRR explanation I've ever heard. Thank you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Happy to hear that, Bongani! I have videos on related capital budgeting techniques for you in this playlist: th-cam.com/video/ZuH_q5crAWg/w-d-xo.html

  • @Dorotheen
    @Dorotheen 4 ปีที่แล้ว +2

    Thank you so much! I was having a hard time to understand the topic, but you were amazing in clarifying it.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      You're welcome! Please subscribe to the channel, I have related videos on topics like WACC and payback period as well.

  • @rso143
    @rso143 4 ปีที่แล้ว +1

    I can't thank you enough about this video, the concept of NPV which I heard yesterday which the professor was not able to explain and left me confused are now solved for just six minute video. although your calculation of IRR is not clear but will use Excel as I know basics of Excel. thank you so much

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Thank you for the compliments, Rayso! Yes, I agree I could have spent more time on IRR in this video. I made follow-up videos to go deeper into IRR, compiled in this playlist: th-cam.com/video/aS8XHZ6NM3U/w-d-xo.html

  • @konstancyja82
    @konstancyja82 4 ปีที่แล้ว +2

    Just used this video for my pmp exam learning. Valueable information in just few minutes.... Thank you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Thanks! Great to hear that. I think you will enjoy the follow-up video on NPV IRR payback scenarios as well, for a deeper understanding: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @nokuzolaholomisa6223
    @nokuzolaholomisa6223 5 ปีที่แล้ว +2

    Thank you so much, I'm writing tomorrow and I was just lost, everything is clear now. Thank you again x

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว

      You're welcome! :-) My follow-up video on WACC vs IRR might also be helpful for you: th-cam.com/video/ZuH_q5crAWg/w-d-xo.html

  • @omarzeyad1382
    @omarzeyad1382 3 ปีที่แล้ว +2

    thank you so much for this video, I spent 3 Hr trying to understand this on the MBA module material, but now its cristal clear after seeing this video

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      You're welcome! Great to hear that, Omar. I have videos for you on related topics like WACC as well th-cam.com/video/1O-DbtVueMw/w-d-xo.html Please spread the word to fellow students!

  • @mooniebo2752
    @mooniebo2752 5 ปีที่แล้ว +4

    easiest explanation I've seen. thank you! you've helped me prepare for my exam!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว

      Thank you for commenting! Wishing you all the best with your exam. Maybe the related video on WACC vs IRR can help you as well th-cam.com/video/ZuH_q5crAWg/w-d-xo.html

  • @zennmaiaguerrero8348
    @zennmaiaguerrero8348 3 ปีที่แล้ว +1

    The way how we solve it in business class way back in uni was a shortcut so after months, it was already forgoten. Thank you for explaning the basis of it. Def understand it now. 😊

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Glad it helped! Here are some more examples to really "get" the deeper ideas behind the calculations th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @themotobanditshow
    @themotobanditshow 5 ปีที่แล้ว +4

    Thank you this is so simple for me to understand. Currently in my second year completing financial risk. Thanks!

  • @alihussainkurbanhussainbhi7748
    @alihussainkurbanhussainbhi7748 ปีที่แล้ว +2

    I really can't thank you enough. I wish I had a teacher like you. God bless you. Amen

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  ปีที่แล้ว

      Happy to help! I can be your virtual teacher on TH-cam! Here is the link to a playlist with related videos like WACC: th-cam.com/video/1O-DbtVueMw/w-d-xo.html

  • @nileshrathod3153
    @nileshrathod3153 4 ปีที่แล้ว +2

    Really explained well. I got in the first attempt. Before watching this video, I watched other videos, but I couldn't understand. Thank you for your efforts!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      You're welcome, Nilesh! Very happy to hear that. I think you will like the related video on NPV and IRR scenarios as well: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

    • @abidullahkhamosh2099
      @abidullahkhamosh2099 4 ปีที่แล้ว

      I did not understand where does this 35, 117 en (46) come from? how has he this calculated

  • @user-zm1dm4il4y
    @user-zm1dm4il4y 3 ปีที่แล้ว +2

    I don't know why, but I'm kinda addicted to the accent! lol thanks for the useful information! learned a lot!

  • @ashwinudapikar3290
    @ashwinudapikar3290 5 ปีที่แล้ว +3

    Very well explained! Thank you so much for the video!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว +1

      Great to hear that, Ashwin! Thank you for watching, and welcome to the channel. :-)

  • @OsaroOyegun
    @OsaroOyegun 5 ปีที่แล้ว +2

    Another concise and well explained video. Thank you!

  • @ericbertoldo1056
    @ericbertoldo1056 4 ปีที่แล้ว +1

    I appreciate your work on these videos and making it easier for others to understand. On the things I didn’t understand you answered those who had questions below. Great work!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Wonderful to hear that, Eric! Thank you for watching and commenting. The questions from viewers indeed helped to clarify some points. I have made a video on NPV and IRR scenarios as a follow-up: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @curtiscurry5775
    @curtiscurry5775 3 หลายเดือนก่อน +1

    You made it all make sense! Thank you!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 หลายเดือนก่อน

      Wonderful to hear that!!! Thank you for watching and commenting. 😊

  • @Anna_Australia
    @Anna_Australia 3 ปีที่แล้ว +2

    I finally found your video, which helps me a lot!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Glad to hear it! More NPV, IRR, payback, WACC and related concepts discussed in this playlist: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @jamesperry3837
    @jamesperry3837 4 ปีที่แล้ว +4

    _Your videos r_ *super.* _Concise and to the point of understanding._ *Tysm*

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      You're welcome, James! Thank you for watching and commenting.

  • @abusufian8667
    @abusufian8667 ปีที่แล้ว +1

    This video is very crucial to understand the core concept of AFM....thank you!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  ปีที่แล้ว

      Thank you very much for the kind words! Related concepts like WACC are discussed in this playlist: th-cam.com/video/1O-DbtVueMw/w-d-xo.html

  • @kevinharilal8288
    @kevinharilal8288 4 ปีที่แล้ว +1

    Dude your videos are really good.
    I appreciate your assistance tremendously

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      Thank you, Kevin! That's awesome. Working on my next video right now. Happy to help!

  • @TheExceptionalState
    @TheExceptionalState 4 ปีที่แล้ว +2

    Clear and concise! Thank you!!!

  • @AAA11546
    @AAA11546 4 ปีที่แล้ว +2

    Thank you, very clearly explained!!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      Thank you for watching and commenting, Tomas! I made a follow-up video last week, playing around with several scenarios of investment and benefits. Hope you like that one as well! th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @janifahbadio6684
    @janifahbadio6684 3 ปีที่แล้ว +1

    This is a simple and great explanation. Thank you so much :)

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Glad you liked it, Janifah! Thank you for watching and commenting. My follow-up video on NPV IR payback period scenarios might also be useful for you to watch: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @kennethromanowski9614
    @kennethromanowski9614 5 ปีที่แล้ว +1

    Excellent presentation. Concise and precise.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว

      Thank you very much, Ken! Great to hear that. I think you might also enjoy the related video on ROI versus payback: th-cam.com/video/o4of1uNSRis/w-d-xo.html

  • @nimidi2568
    @nimidi2568 2 ปีที่แล้ว +1

    Shortest and best way to understand the concept. Thanks

  • @vanderpant2116
    @vanderpant2116 4 ปีที่แล้ว +3

    Thank you for a clear concise and easy to understand vid 😁

  • @notevoyadarminombre156
    @notevoyadarminombre156 3 ปีที่แล้ว +1

    You deserve a cookie. Thank you very much for this explanation.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      You're welcome! Opportunity to buy me cookies, a cup of tea, etc. at: th-cam.com/channels/QQJnyU8fALcOqqpyyIN4sg.htmljoin ;-)

  • @Jhangerr
    @Jhangerr 5 ปีที่แล้ว +3

    Simple and good explanation. Thank you.

  • @JohnRMTurner
    @JohnRMTurner 4 ปีที่แล้ว +1

    Great video. Thanks for explaining this with a simple example.

  • @todddahlquist7584
    @todddahlquist7584 4 ปีที่แล้ว +3

    I finally understand the difference - thank you!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Great to hear that, Todd! Happy to help. :-)

    • @abidullahkhamosh2099
      @abidullahkhamosh2099 4 ปีที่แล้ว

      I did not understand where does this 35, 117 en (46) come from? how has he this calculated

  • @networkteamtools6528
    @networkteamtools6528 4 ปีที่แล้ว +1

    you've made complicated things, simple.... well done✊

  • @user-tp5ko7zk6g
    @user-tp5ko7zk6g 10 หลายเดือนก่อน +2

    The best explanation. Thank you !

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  10 หลายเดือนก่อน

      Thank you very much for the compliment. Related topics like WACC and payback period are discussed in this playlist: th-cam.com/video/1O-DbtVueMw/w-d-xo.html&pp=gAQBiAQB

  • @rummanamarzia1288
    @rummanamarzia1288 4 ปีที่แล้ว +5

    Thank u so much sir..
    Understood many things what didn’t in class....

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Thank you, Rummana! Happy to hear that. And well done searching for additional information to expand what was covered in class! I think you will like my NPV/IRR scenarios video as well that covers these concepts with more examples: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @nikitagorbachevskiy6664
    @nikitagorbachevskiy6664 5 ปีที่แล้ว +2

    Perfect! Thank you!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว

      You're welcome! I have related videos on payback method and ROI on my channel as well: th-cam.com/video/o4of1uNSRis/w-d-xo.html

  • @daxiaohaha4172
    @daxiaohaha4172 4 ปีที่แล้ว +1

    Thanks, really enlightened video, thumps up!

  • @abheranmoodley4950
    @abheranmoodley4950 2 ปีที่แล้ว +1

    Thank you very much for this video! It is very clear and easy to understand.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Glad to hear that, Abheran! Related concepts like WACC, payback period and crossover rate are covered in this playlist: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @TeachAManToAngle
    @TeachAManToAngle 3 ปีที่แล้ว +3

    You really do a great job explaining this. It had been years since I learned this in business school. Very good refresher

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว +1

      Glad it was helpful! I have related videos on payback period, WACC, etc. as well for you as a refresher: th-cam.com/video/1O-DbtVueMw/w-d-xo.html

  • @MM-zd4md
    @MM-zd4md 7 หลายเดือนก่อน +2

    awesome explanation. Thank you !

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  7 หลายเดือนก่อน

      Good to hear that. Glad it was helpful! Videos on related topics like WACC and discounted payback are available in this playlist: th-cam.com/video/1O-DbtVueMw/w-d-xo.html&pp=gAQBiAQB

  • @raquelm.w.7974
    @raquelm.w.7974 4 ปีที่แล้ว +2

    Very helpful, thank you!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      You're welcome, Raquel! The sequel to this video might also be useful for you. It covers various scenarios of investment level and benefits: th-cam.com/video/1ZTIwmn1Cm0/w-d-xo.html

  • @trevorspear5970
    @trevorspear5970 5 ปีที่แล้ว +1

    Thank you that make sense now!!!

  • @saodatkurmanayeva434
    @saodatkurmanayeva434 2 ปีที่แล้ว +1

    this helped so much, you're a saviour!

  • @Holland1994D
    @Holland1994D 4 ปีที่แล้ว +2

    Hey je bent Nederlands! Thanks, duidelijk uitgelegd, jammer dat ik nu pas je video zie ipv voor mijn tentamen. Gelukkig snap ik het nu wel een stuk beter voor het hertentamen!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      Jazeker! Welkom! Beter laat dan nooit. ;-) Veel succes met je hertentamen. Hier is de link naar een playlist met alle NPV/IRR gerelateerde termen (ook payback, WACC, etc.): th-cam.com/video/N-lN5xORIwc/w-d-xo.html

    • @Zwart-in6vc
      @Zwart-in6vc 3 ปีที่แล้ว +1

      @@TheFinanceStoryteller wat is nou precies de relatie tussen de npv en IRR? Deze vraag krijg ik op mijn assessment

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว +1

      @@Zwart-in6vc Dat draait om wat je als input neemt, en wat als output. Kort samengevat in het Engels: NPV Step 1) Determine nominal (undiscounted) cash flows
      , Step 2) Apply discount rate to calculate present values, Step 3) Calculate Net Present Value (NPV) by summing the discounted cash flows. IRR Step 1) Determine nominal (undiscounted) cash flows, Step 2) Set NPV at 0, Step 3) Calculate Internal Rate of Return (IRR) through trial and error, or Excel. Zie ook: th-cam.com/video/aS8XHZ6NM3U/w-d-xo.html

  • @shreeniwas048
    @shreeniwas048 5 ปีที่แล้ว +1

    Wow very clearance of concept. You make it in simply.

  • @kedard134
    @kedard134 ปีที่แล้ว +1

    Thank you for explaining this is a simple no fuss manner.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  ปีที่แล้ว

      Yeah, let's get it done in 5 minutes, if we can, and move on to the next topic. 😎

  • @olayinkaafun5469
    @olayinkaafun5469 3 ปีที่แล้ว +1

    Concise and straight to the point. Thank you.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว +1

      Exactly, Olayinka! :-) Here's the link to related videos on capital budgeting that could be helpful for you as well th-cam.com/video/1O-DbtVueMw/w-d-xo.html

    • @olayinkaafun5469
      @olayinkaafun5469 3 ปีที่แล้ว +1

      @@TheFinanceStoryteller Thanks alot.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      @@olayinkaafun5469 You're welcome! Let me know if you think any topics are missing, I am always looking for good topics for new videos.

  • @travelwithrishi7121
    @travelwithrishi7121 4 ปีที่แล้ว +8

    As a high school student starting his undergrad studies in Finance this year, your videos are so good and you really have a knack for making these difficult concepts easy to understand. However, I have a question;
    In this video, you used PV=FV/[(1+r)]^n formula to calculate PV. However, in some other videos on youtube, some of them use the disocunt rate to calculate the PV. So I was wondering what was the link between discount rate and this formula and also, how is the discount rate derived? Thanks!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      Hello Rishi! That is an excellent question, I think you will go far in finance! The discount rate is the same as r in the formula I use. It is sometimes also called "required rate of return". I suggest to watch my video on WACC:
      th-cam.com/video/1O-DbtVueMw/w-d-xo.html
      and the one about WACC vs hurdle rate:
      th-cam.com/video/8EyFLdOTuHU/w-d-xo.html
      to learn more, and put the terms in perspective.

  • @michelleou9814
    @michelleou9814 7 หลายเดือนก่อน +2

    Thank you so much for the clear explanation! I didn't quite get how we arrived at 35 for the NPV of project A though; since the NPV values of the following years are so large, if we add them together, how do we come to 35? Thank you so much!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  7 หลายเดือนก่อน

      Glad it helped! 35 came from calculating the present value of the future cash flows of 333+278+231+193 which is equal to 1035 and deducting the initial investment of 1000 from this, and you got this 35.

  • @stevenyang9682
    @stevenyang9682 3 ปีที่แล้ว +1

    thanks a lot! this is much clearer than lecture!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      Great to hear that, Steven! Thank you for watching. I also cover related topics like WACC, crossover rate, and profitability index on my channel.

  • @benedictgrochla5907
    @benedictgrochla5907 2 ปีที่แล้ว +1

    Pretty good, thank you!!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Happy to hear that, Benedict! Take a look at my capital budgeting playlist for related topics: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @jngf100
    @jngf100 2 ปีที่แล้ว +1

    Very clearly explained - thanks kindly!

  • @cortney4soul
    @cortney4soul 2 ปีที่แล้ว +1

    The best breakdown i have seen.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Thank you, Cortney! That is wonderful to hear. More capital budgeting videos in this playlist: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @cheriewong4548
    @cheriewong4548 4 ปีที่แล้ว +1

    omg you explained this so well... im so amazed!!!! THANK YOUUUUUUUUUU

  • @TheMakky7
    @TheMakky7 4 ปีที่แล้ว +1

    Your explanation has helped me so much in understanding the two calculations and there relationship however, I am confused on how you obtained your IRR for all projects as when I enter the data ( the WACC) in my calculator it does equate to 0... Is there a reason for this?

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Not sure how your calculator is working, but here's some more information on the IRR concept th-cam.com/video/aS8XHZ6NM3U/w-d-xo.html as well as a video on calculating IRR in Excel: th-cam.com/video/L0JCg5TXudc/w-d-xo.html Hope these help!

  • @elanalistafinanciero
    @elanalistafinanciero ปีที่แล้ว +1

    Excellent presentation, Thanks so much !!!

  • @PeterTamura
    @PeterTamura 4 ปีที่แล้ว +4

    Interesting, thanks for the great explanation. These calculations of course are subject to assumptions, it's not always easy to know the exact cash flow you will get in year 3. Also, if there are ways to reinvest the cashflows from year 1 and year 2 back into the project, the returns could be higher...

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +3

      Excellent points, Peter! I agree with you. I tried to keep it as simple as possible in the video. ;-)

  • @TheExceptionalState
    @TheExceptionalState 4 ปีที่แล้ว +1

    Very clear. Thanks!

  • @kekelidenutsui6517
    @kekelidenutsui6517 2 ปีที่แล้ว +1

    You made it all. Am loving it🔥👌

  • @meenamenon2219
    @meenamenon2219 2 ปีที่แล้ว +1

    so so lucid! THANK YOU

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Thank you, Meena! Related topics are in this playlist: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @user-xp1rl2wt7y
    @user-xp1rl2wt7y 4 ปีที่แล้ว +1

    Thank you for your easy and clear explanation.

  • @mamtasaravanan985
    @mamtasaravanan985 2 ปีที่แล้ว +1

    Very nicely explained.Love your videos.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Thank you so much, Mamta! 🙂 That is nice to hear. Please spread the word!

  • @mirnahanger9054
    @mirnahanger9054 3 ปีที่แล้ว +1

    Thank you, this was a very clear explanation or IRR.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว

      You're welcome! Happy to hear that. Related topics in this playlist: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @slay9470
    @slay9470 7 หลายเดือนก่อน +1

    Thank you bro you deserve a like

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  7 หลายเดือนก่อน

      Happy to help! Have a look at the related videos in the NPV IRR WACC playlist as well, there could be more useful stuff in there: th-cam.com/video/1O-DbtVueMw/w-d-xo.html&pp=gAQBiAQB

  • @bobbydreamsforu
    @bobbydreamsforu 4 ปีที่แล้ว +1

    WoW !! Thank you very much.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      You're welcome, Satish! Glad to hear you liked it.

    • @bobbydreamsforu
      @bobbydreamsforu 4 ปีที่แล้ว +1

      Your explanation is beyond wonderful ❤️ Thank you brother !!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      @@bobbydreamsforu If you liked this video, then I recommend the related videos in the NPV IRR WACC playlist as well: th-cam.com/video/N-lN5xORIwc/w-d-xo.html

  • @dreams_in_a_pie
    @dreams_in_a_pie 4 ปีที่แล้ว +2

    Perfect!!! I understand what NPV and IRR are!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Great to hear that! Thank you! :-)

    • @abidullahkhamosh2099
      @abidullahkhamosh2099 4 ปีที่แล้ว

      I did not understand where does this 35, 117 en (46) come from? how has he this calculated

    • @dreams_in_a_pie
      @dreams_in_a_pie 4 ปีที่แล้ว +1

      @@abidullahkhamosh2099 For NRV project A 35
      333+278+231+193-1000=35
      Same calculation for project B and C

  • @rehanrana1
    @rehanrana1 5 ปีที่แล้ว +2

    Thanks so much. helped me alot.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว

      Great to hear that. The related video on payback period might also be interesting for you to watch: th-cam.com/video/FJjGi7gsK3A/w-d-xo.html

  • @mundheral.askari3450
    @mundheral.askari3450 3 ปีที่แล้ว +1

    Thank you so much, this is really helpful :-)

  • @poorviradhakrishnan
    @poorviradhakrishnan 4 ปีที่แล้ว +1

    Thanks a lot Philip De Vroe!! 😊

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +1

      You're welcome, Poorvi Radhakrishnan! :-) Thank you for watching.

  • @Michael-je5bn
    @Michael-je5bn 2 ปีที่แล้ว +1

    Yes, very good stuff.

  • @SharonD88
    @SharonD88 3 ปีที่แล้ว +1

    Wahoo I want to say thank you, your explanation is the best for me, really easy, 💖🙏thank you.
    I will check all your content. 👍1,000

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  3 ปีที่แล้ว +1

      You're welcome 😊 I have related videos on WACC, profitability index, etc. as well for you: th-cam.com/video/1O-DbtVueMw/w-d-xo.html

  • @leoclarkin5944
    @leoclarkin5944 5 ปีที่แล้ว +1

    clearly understood, thx

  • @tumil8256
    @tumil8256 4 ปีที่แล้ว +1

    Thank you so much...you’re the best

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      You're welcome, Tumi! Welcome to the channel, please subscribe.

  • @endragoth
    @endragoth 10 หลายเดือนก่อน +1

    Thanks a lot for sharing, very educational and useful

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  10 หลายเดือนก่อน

      My pleasure! Related concepts like WACC are discussed in this playlist: th-cam.com/video/1O-DbtVueMw/w-d-xo.html&pp=gAQBiAQB Please spread the word to friends and colleagues.

  • @jaredbordere5993
    @jaredbordere5993 5 ปีที่แล้ว +86

    What do you mean by, "you simply sum across and find a NPV of 35"

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  5 ปีที่แล้ว +133

      Summing across is adding up the amounts. ($1000) + $333 + $278 + $231 + $193 = $35. ($1000) is the cash outflow in year 0, $333 is the present value in year 0 of the expected $400 nominal cash inflow benefits in year 1, $278 is the present value in year 0 of the expected $400 nominal benefit in year 2, etc. Finance people have the habit of writing -$1000 as ($1000). The $1000 is a negative, a cash outflow, the other four numbers are positives. So the summation is negative/minus $1000 plus $333 plus $278 plus $231 plus $193, which in total is $35.

    • @froufou100
      @froufou100 4 ปีที่แล้ว +2

      @@TheFinanceStoryteller and then how do you get the 22% IRR? Sorry if that sounds obvious, numbers are not my thing but have to learn it for my business analysis diploma :)

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +2

      @@froufou100 That is a good question! I have more detail on IRR in a specific video on the topic: th-cam.com/video/aS8XHZ6NM3U/w-d-xo.html and can also show you in Excel how to calculate IRR th-cam.com/video/L0JCg5TXudc/w-d-xo.html

    • @ull893
      @ull893 4 ปีที่แล้ว +3

      @@TheFinanceStoryteller Thanks for the reply. You should have explained that in the video.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว +14

      @@ull893 We learn step-by-step. Only after I finish a video do I realize what I could have explained better....

  • @zainabali5951
    @zainabali5951 5 ปีที่แล้ว +1

    Thanks... simple to understand

  • @gabz-26-gb80
    @gabz-26-gb80 2 ปีที่แล้ว +1

    Thank you for these videos they are really helpful!
    One question: What is the reason we assume NPV to 0 to determine IRR. What does that indicate when we do this? I know a positive NPV means moving forward with a project and vice versa if negative, but if we have an NPV of 0, what does that indicate? Thank you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  2 ปีที่แล้ว

      Good question! My video on WACC vs IRR will answer it for you: th-cam.com/video/ZuH_q5crAWg/w-d-xo.html

  • @abbasnajam6935
    @abbasnajam6935 4 ปีที่แล้ว +1

    Very nicely explained :)

  • @jonathanlewin9775
    @jonathanlewin9775 5 ปีที่แล้ว +1

    GREAT VIDEO THX U!

  • @sarthakkumar3326
    @sarthakkumar3326 5 ปีที่แล้ว +1

    Great video all clear

  • @RahmatAli-yg9tv
    @RahmatAli-yg9tv 10 หลายเดือนก่อน

    Excellent, thanks ❤

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  10 หลายเดือนก่อน

      You're welcome 😊 Related concepts are discussed in the NPV IRR WACC playlist: th-cam.com/video/1O-DbtVueMw/w-d-xo.html&pp=gAQBiAQB

  • @mrtural4977
    @mrtural4977 4 ปีที่แล้ว +1

    Thank you very much for good explanation

  • @tinafarahani2525
    @tinafarahani2525 3 ปีที่แล้ว +1

    thank you so much!

  • @manishkhanijo
    @manishkhanijo 5 หลายเดือนก่อน +1

    Very well explained

  • @endangeredspecies5005
    @endangeredspecies5005 4 ปีที่แล้ว

    i will bet a $10000 if the presenter is not from arabic descent. the accent is absolutely nourishing and left your spirit.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Personally, I enjoy good videos regardless of the accent! ;-) But as you are asking, the accent is Dutch (i.e. from the Netherlands). I did spend a good amount of time delivering training in Abu Dhabi and Dubai, so had the pleasure of visiting the Middle East multiple times.

  • @motalibhossain3971
    @motalibhossain3971 4 ปีที่แล้ว +1

    very good explanation, thank you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  4 ปีที่แล้ว

      Nice to hear that, Motalib! Thank you for watching and commenting.

  • @sethvidana4210
    @sethvidana4210 4 ปีที่แล้ว +1

    great explanation