vintagevideopokermachine|. Application cases of internal rate of return-analyze how to apply internal rate of return to investment decisions in real cases

Internal rate of returnVintagevideopokermachineApplication case analysis based on gis

Internal rate of return (Internal Rate of Return)VintagevideopokermachineIRR) is an important index in the evaluation of investment projects, which evaluates the investment benefits by calculating the cash flow of the project. Through the actual case analysis, this paper will discuss how to apply the internal rate of return to make investment decisions.

Case 1: real estate investment project

Suppose investor A plans to buy a property with an estimated purchase price of 1 million yuan, an estimated annual rental income of 100000 yuan, and an estimated sale price of 1.2 million yuan in five years' time. Next, we will calculate the internal rate of return for this investment project.

Year cash flow (ten thousand yuan) 0-100 1-5 10 6 20

Through the financial calculator or related software, we get that the internal rate of return of the real estate investment project is 12%. If investor A requires a return of 10%, you can consider investing.

Case 2: enterprise expansion project

A manufacturing enterprise plans to expand the production scale, and the total investment is expected to be 5 million yuan. After the implementation of the project, the annual income is expected to increase by 2 million yuan, and the project cycle is expected to be 5 years. We can also evaluate the feasibility of the project by calculating the internal rate of return.

Year cash flow (ten thousand yuan) 0-500 1-5 200

After calculation, the internal rate of return of the enterprise's expansion project is 18%. If the cost of capital of the enterprise is 15%, then the investment project is worth implementing.

Case 3: investment in new energy projects

Investor B plans to invest in a new energy company with an initial investment of 3 million yuan. It is expected that there will be no income in the first three years after the project is operated, and the annual income from the fourth year will be 1.5 million yuan. The total project cycle is expected to be 8 years. What is the rate of return on investment?

Annual cash flow (ten thousand yuan) 0-300 1-30 4-8 150

Through the calculation, the internal rate of return of the new energy project investment is 16%. If investor B has a high risk tolerance and has confidence in the new energy industry, he can consider investing.

To sum up, the internal rate of return, as an investment evaluation tool, can help investors to make investment decisions more scientifically. However, it should be noted that the internal rate of return is not the only evaluation index, and the actual investment decision needs to be judged comprehensively by combining other financial indicators, market conditions and the risk tolerance of investors.