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Internal Rate of Return

How to Calculate Rate of Return On A Real Estate Investment (John & Jane Jones Pt. 6 of 9)

How to Calculate Rate of Return On A Real Estate Investment (John & Jane Jones Pt. 6 of 9)
“Hello, this is John Jones.  I know we have called a number of times with ‘opportunities’ but this time I think we really have one,” John said excitedly as I answered the telephone early Monday morning before my first appointment. “That is good news,” I said.  “Do you want to tell me about it over the telephone or come in fo… Continue Reading

Average Does Not Equal Actual

Average Rates of Return are often touted by financial experts, and yet simple math can show us that Average does not equal Actual. Pretend that you invested $100,000 into a mutual fund that had promised an average rate of return of 25% if you left the money alone for 2 years. In the first year it earned 100%. After the first year, the investment would look like this: In the s… Continue Reading

Calculating Internal Rate of Return

How do you calculate the internal rate of return on an investment when the cash flows vary and you can’t use a typical financial calculator that only functions with the same stream of payments, not a varying stream?  For example, you invest in an oil well where you contribute $100,000 the first year and the second year there is a $20,000 capital call (meaning you co… Continue Reading