From the course: Investment Evaluation

Unlock the full course today

Join today to access over 22,600 courses taught by industry experts or purchase this course individually.

The case of multiple IRRs

The case of multiple IRRs - Microsoft Excel Tutorial

From the course: Investment Evaluation

Start my 1-month free trial

The case of multiple IRRs

“

- I'm gonna show you a bit of a strange scenario in which you should also ignore IRR. A quick warning ahead of time. This is gonna get really math intensive and I'm gonna show you how to do it by hand. It's much easier to just do it in Excel. If you like math, keep watching, otherwise, pass on this video and move on. Are you still hangin' on? Okay, feel free to pause and take notes as you please. It took me a couple of times to get this concept when I first started. So rewatch as much as you need. Multiple IRRs generally happen when there's a sign change from a negative to a positive, and then back to a negative on a timeline. Let's set the scenario, and this is purely hypothetical, so you'll have to stretch your imagination a bit. Now, suppose that Kevin is taking on a restoration project. At first, he's gonna drop 3.2 million dollars to renovate a beautiful Venitian mansion. Okay, so that's a negative cash flow of 3.2 million at time zero. Now, when he sells it at time one, he's…

Contents