What is the financial internal rate of return on capital?

The internal rate of return refers to the rate of return that can actually be achieved by the investment in the project, which is the discount rate when the net present value is equal to zero. The financial internal rate of return on capital is related to the net present value and the net present value rate.

The formula is: ci-cotx1+firr-t=0,t=1-n.

The financial internal rate of return on capital refers to the financial net cash flow of the project in each year during the entire calculation period.

The discount rate when the sum of the present values is equal to zero.

That is, to make the financial net present value of the project.

The discount rate when it is equal to zero.

The contents of the financial internal rate of return are as follows:

1. The financial internal rate of return is a dynamic index that reflects the actual rate of return of the project, and in general, the financial internal rate of return is greater than or equal to the benchmark rate of return.

, the project is feasible;

2. The calculation process of financial internal rate of return is the process of solving the unary nth equation, and only the conventional cash flow can guarantee the equation.

There is a unique solution; 3. The discount rate when the present value of the net cash flow of the project of the financial internal rate of return of capital is accumulated equal to zero during the calculation period; It is the main dynamic evaluation index to examine the profitability of the project;

4. Financial internal rate of return, the indicator takes into account the time value of funds.

and the economic situation of the project throughout the calculation period, which not only reflects the degree of return of the investment process, but also the size of the FIRR is not affected by external parameters and depends entirely on the net cash flow series of the project's investment process; It avoids the dilemma of determining the benchmark rate of return in advance, as is the case with indicators such as the financial net present value, and only needs to know the approximate range of the benchmark rate of return;

5. The calculation of the financial internal rate of return is more troublesome, for projects with unconventional cash flow, the financial internal rate of return does not even exist in this group in some cases, or there are multiple internal rates of return;

6. Financial internal rate of return, financial internal rate of return refers to the discount rate when the sum of the present value of the financial net cash flow of the project or regret in each year is equal to zero, that is, the discount rate when the financial net present value of the project is equal to zero;

7. The internal rate of return also indicates the ability to resist risks during the operation of the project, such as 10% of the internal rate of return, which means that the maximum risk that can be borne during the operation of the project is 10% per year; In addition, if a loan is required in the operation of the project, the internal rate of return can indicate the maximum tolerable interest rate, and if the loan interest has been included in the economic calculation of the project, it indicates the maximum floating value of the loan interest in the course of future project operation.

With the development of society and economic progress, there are many people who want to improve their economic income in other places. Then for those who don't have a side hustle, they will choose to invest, so in fact, there is a certain risk in investing. And there is some professional knowledge in investment, which many people don't understand too well.

So today we are going to talk about capital.

rate of return, and rate of return on investment.

What is the difference between them.

The determinants are different first of all, the determinants are different between them, because we all know for an investment project.

The rate of return on our investment needs to be determined based on the net cash of the project. Then with the capital structure.

It doesn't matter, there is also the rate of return on the internal capital, which depends on the proportion of the loan and the interest rate of the loan. If we say that the larger the proportion of loans, the lower the interest rate on loans. Therefore, the higher the internal return of its funds, and the higher the risk.

Then the financial sector will depend on the degree of risk of the project, as well as its profitability.

to determine the proportion of its funds.

The other aspect of the coverage difference is that they cover differently between them, because sometimes the internal rate of return of the investment.

It can be determined based on the expected rate of return of the total capital, but if the internal rate of return of the investment is a part of the total capital. Therefore, there is a covering relationship between them, so the return on investment is only a part of the return on capital. We should have a systematic understanding when distinguishing between them, so that we do not get confused and affect our investment.

There are a lot of relationships in investing, but if you want to figure it out, you have to spend a certain amount of time figuring out the relationships between them and the connections between them. It can make us more comfortable in the process of investment, and at the same time let us get more benefits. In this way, it is actually another way of protecting us, so that we do not lose too much when investing.

The difference between the two of them is that the determinants are different, the content is different, the return on investment has nothing to do with capital, and the return on capital is an analysis of the rate of return that can be achieved by all funds.

The rate of return on capital is the income and principal income of capital funds, the return on investment of principal, and the rate of return on capital is the rate of return on increasing positions in the future.

Summary. Hello! The formula for calculating the financial internal rate of return on capital is: ci-cotx1+firr-t=0 t=1-n

At the same time, the internal rate of return also indicates the ability to resist risks during the operation of the project, for example, the internal rate of return of 10% indicates that the maximum risk that can be tolerated during the operation of the project is 10% per year. In addition, if a loan is required in the operation of the project, the internal rate of return can indicate the maximum tolerable interest rate, and if the loan interest has been included in the economic calculation of the project, it indicates the maximum floating value of the loan interest in the course of future project operation.

For example, if the IRR is benchmarked at 8% and inflation is assumed to be around 8%. If it is equal to 8%, it means that when the project operation is completed, there is no money except for the "salary" received by "yourself", but it is still feasible. If it is less than 8%, it means that there is a high probability that the project operation will be at a loss when the project operation is completed.

How to calculate the financial internal rate of return on capital.

Hello, it's a pleasure for me to answer this question for you, it may take me a few minutes to sort out the information and type, please be patient for a few minutes......

Hello! The formula for calculating the financial internal rate of return of capital is: ci-cotx1+firr-t=0 t=1-nAt the same time, the internal rate of return also indicates the ability to resist risks during the operation of the project, such as 10% internal rate of return, which means that the maximum risk that can be borne during the operation of the project is 10% per year.

In addition, if a loan is needed during the project operation, the internal rate of return can indicate the maximum tolerable interest rate, and if the loan interest has been included in the economic calculation of the project, it indicates the maximum floating value of the loan interest in the future project operation. For example, if the IRR is benchmarked at 8% and inflation is assumed to be around 8%. If it is equal to 8%, it means that when the project operation is completed, there is no money except for the "salary" received by "yourself", but it is still feasible.

If it is less than 8%, it means that there is a high probability that the project operation will be at a loss when the project operation is completed. Hello, the above is yes, you can refer to it, I hope it will help you I wish you a happy life! 

The difference between the two: First, the determinants are different.

1. For an established investment project, the internal rate of return of all investments is completely determined by the net cash flow of the project, which has nothing to do with the capital structure and can be regarded as a fixed value.

2. The internal rate of return of own funds depends entirely on the loan ratio and loan interest rate. The larger the loan ratio and the lower the loan interest rate, the higher the internal rate of return of own funds, and the higher the risk borne by own funds. As the proportion of loans decreases, the internal rate of return on own funds also decreases, but the risk taken also decreases. It should be noted that there is also an upper limit on the loan ratio, and the financial sector will put forward minimum requirements for the proportion of the project's own funds in the total investment according to the risk level and profitability of the project.

Second, the coverage is different.

The internal rate of return of all investments is the expected rate of return of all funds, and the internal rate of return of own funds is only the expected rate of return of the part of all funds that belong to oneself.

Dear, I am glad to answer for you, the financial internal rate of return on capital is a method used to evaluate the rate of return of investment projects, and its calculation method is as follows:1Determine the cash round flow of the investment project.

This includes investment amounts, cash receipts and expenses, depreciation and amortization, etc. 2.The internal rate of return is calculated using financial software or formulas, which is defined as the rate of return at which the present value of the total cash flow of an investment project is equal to zero.

3.The internal rate of return is calculated by repeatedly trying different rates of return so that the present value is zero. For example, suppose the cash flow of an investment project is:

200, 50, 75, 80, 60 of which, 200 is the investment amount, the last four are cash income, income and expenditure are positive and negative opposites. We can calculate the IRR using the following formula: -200 + 50 (1+IRR) +75 (1+IRR) 2 + 80 (1+IRR) 3 + 60 (1+IRR) 4 = 0 By multiple calculations, we get the IRR to be approximate.

This means that if the IRR of this investment project is, then a project with an investment amount of 200 can earn the same rate of return in the future under similar investment conditions.

The internal rate of return on capital is the discount rate when the total present value of capital inflows is equal to the total present value of capital flows and the net present value is equal to zero. The internal rate of return of capital also indicates the ability to resist risks during the operation of the project, such as the yield of 10% on the inner shelter, which means that the maximum risk that can be borne by ants during the operation of the project is 10%.