idm: Net Present Value (NPV) and Internal Rate of Return (IRR) of...

In corpmetrics: Tools for Valuation, Financial Metrics and Modeling in Corporate Finance

Net Present Value (NPV) and Internal Rate of Return (IRR) of an investment

Description

Basic investment decision methods: (1) Net Present Value (NPV), (2) Internal Rate of Return (IRR).

Usage

idm(CFS,COST)

Arguments

CFS	A numerical vector with the investment's expected cash flows.
COST	A numerical vector with the investment's expected cost of capital (interest rates).

Details

The first cash flow must be the initial cost of investment, thus a negative value. Cash flows and interest rates must have the same length.

Value

A data.frame with the investment decision methods and their respective values.

Author(s)

Pavlos Pantatosakis.

R implementation and documentation: Pavlos Pantatosakis [e-mail].

References

Berk, J. B. and DeMarzo, P. M. (2017). Corporate finance. Pearson Education. p.100-103 & p.248-251 - ISBN: 1292160160

Ehrhardt, M. C. and Brigham, E. F. (2010). Corporate finance: A focused approach. South-Western Cengage Learning. p. 383-389 - ISBN: 1439078084

See Also

uniroot

Examples

##
# Example usage
# Initial Investment = 100 currency units
# Expected to bring 120 currency units the next period
# The cost of capital is 10%

example <- idm(
  CFS = c(-100,120),
  COST = c(0,0.1)
)

print(example)

corpmetrics documentation built on Sept. 11, 2024, 9:03 p.m.