When calculating the internal rate of return of project investment, the repayment interest of project loan is generally not considered in the cash outflow part.

"Interest can be regarded as the profit of bond investors", that is to say, both project investors and banks are counted as investors, and loan interest is the bank's income, not its expenditure. To some extent, the calculation of internal rate of return (IRR) can be regarded as the reverse process of calculating net present value (NPV), that is, the reverse process of calculating discount rate when NPV=0 is known.

Npv concept:

The Chinese name of npv is the net present value in mbth, the exponent is abbreviated as NPV, and the calculation formula is NPV = ∑ (ci-co) (1+i)-t.

Npv net present value (Npv) refers to the difference between the present value of future capital (cash) inflow (income) and the present value of future capital (cash) outflow (expenditure), which is the basic index of NPV method in project evaluation. Convert future capital inflow and capital outflow into present value according to the present value coefficient of each period of the expected discount rate, and then determine their present value. This expected discount rate is determined according to the minimum investment return rate of the enterprise, which is the minimum acceptable limit of enterprise investment.

English: The net present value of a project is the present value of current and future benefits, and the present value of current and future costs. During the calculation period of the project, the algebraic sum of the present value of each year's net cash flow calculated according to the industry benchmark discount rate or other set discount rates.

Net present value refers to the difference between the net cash flow generated by the investment scheme and the present value of the original investment discounted at the discount rate of capital cost. Net present value method is a method to evaluate the advantages and disadvantages of the scheme according to net present value. If the net present value is greater than zero, the scheme is feasible. The greater the net present value, the better the scheme and the better the investment benefit.

Financial management: The net cash flow after investment projects are put into use is converted into present value according to the cost of capital or the rate of return required by enterprises, and the balance after deducting the initial investment is called net present value (NPV).

Net present value: the discounted present value of expected cash flow in each stage of the project life MINUS the sum of initial investment expenditure.

Calculation method of net present value:

1, calculate the annual operating net cash flow.

2. Calculate the total present value of future remuneration.

(1) Convert the annual net operating cash flow into present value. If the NCF is equal every year, it will be converted into present value according to the annuity method; If the annual NCFs are not equal, first discount the annual NCFs and then add them up.

(2) Convert the ending cash flow into present value.

(3) Calculate the total present value of future remuneration.

3. Calculate the net present value.

Net present value = the total present value of future remuneration-the present value of initial investment.