idm {corpmetrics} | R Documentation |
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 pantatosakisp@yahoo.com.
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
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)