Tax impact on Equity and Project IRRs

by | Jan 25, 2018 | Finance

As Naiyer posted a while ago the relationship between project IRR and equity IRR, which constitute a curious trio along with Cost of Debt (CD) in project finance. Below graph indicates how the relationship between EIRR/PIRR inverses when cost of debt equals project...

What is Incremental IRR?

by | Apr 5, 2016 | Finance

Incremental IRR is a way to analyze the financial return when there are two competing investment opportunities involving different amounts of initial investment. In this post we will explore how to calculate incremental IRR and how it helps in deciding between two...

The Curious Case of Negative IRR

by | Mar 29, 2016 | Excel, Finance

Negative IRR indicates that the sum of post-investment cash flows is less than the initial investment; i.e. the non-discounted cash flows add up to a value which is less than the investment. So yes, both in theory and practice negative IRR exists, and it means that an...

Shareholder Loan and Equity IRR

by | Jan 4, 2016 | Finance

Many a time I’m requested to explain the relation between shareholder loan and the equity IRR. Should shareholder loan be part of equity IRR calculation? And if there are more than one equity investor, what should we do! Shareholder loan is a debt-like form of...

How Does Excel Calculate IRR?

by | Oct 5, 2015 | Excel, Finance, Formulas

Have you ever wondered how does Excel calculate internal rate of return (IRR)? I never gave it second thought until I wrote a post on the issues with NPV calculation in Excel. Our reader, Deyan, pointed that similar type of issue can exist with the IRR calculation in...

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