Do you calculate the IRR ratio based on the net cash flow or the accumelated cash flow?

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Do you calculate the IRR ratio based on the net cash flow or the accumelated cash flow?

2007-03-12 02:53:42 · 3 answers · asked by Romario 1 in Business & Finance ➔ Investing

3 answers

The IRR is calculated using the net cash flowes in each period. However, the result is the same if you calculate the cash flows in and cash flows out separately in each period and then add up the PVs. Just make sure that you keep your signs straight and don't add until everything is in time 0 dollars.

2007-03-12 03:10:42 · answer #1 · answered by Homer J. Simpson 6 · 0⤊ 0⤋

it's cash flow of each time period. don't forget to discount by the first year's flow at the end.

2007-03-12 17:05:53 · answer #2 · answered by jules4128 2 · 0⤊ 0⤋

accumulated cash flow, ie: Net Income + depreciation.

2007-03-12 06:37:47 · answer #3 · answered by Mathew C 5 · 0⤊ 0⤋