Incremental internal rate of return (Incremental Internal Rate of ReturnLiveblackjackcasinoIRR) method is a method to evaluate the investment benefit of a project.LiveblackjackcasinoIt calculates the incremental internal rate of return of the project by analyzing the investment, cash flow and income of the project, so as to help decision makers to judge whether the project has investment value. This paper will analyze the application of incremental internal rate of return method in practical projects through specific cases.
Case 1: investment decision of new energy project
An enterprise plans to invest in the construction of a solar power station, with a total investment of 10 million yuan and a project operation period of 10 years. According to the forecast, 2 million yuan of cash flow can be generated every year during the project period. In order to evaluate the investment benefit of the project, we need to calculate its incremental internal rate of return.
Year cash flow (ten thousand yuan) 12002200320042005200620072008200920010200Assuming that the cost of capital of the enterprise is 8%, we can calculate the incremental internal rate of return of the project as 12% through financial calculation software or manual calculation. Since 12% is more than 8% of the capital cost of the enterprise, it shows that the project has investment value.
Case 2: real estate project investment decision
A developer plans to invest in the construction of a residential district, with a total investment of 50 million yuan and a project period of 3 years. According to the forecast, the sales revenue will be 80 million yuan after the completion of the project. In order to evaluate the investment benefit of the project, we also need to calculate its incremental internal rate of return.
Annual cash flow (ten thousand yuan) 1-50002038000It is also assumed that the developer's cost of capital is 10%, and the incremental internal rate of return of the project is 15% through financial calculation software or manual calculation. As 15% is greater than 10% of the capital cost of the developer, it shows that the project has a high investment value and is worth investing.
Through the above two cases, we can see that the application of incremental internal rate of return method in practical projects has high practical value. By calculating the incremental internal rate of return of the project, enterprises or individual investors can evaluate the investment benefits of the project more accurately and make more informed investment decisions.