How To Calculate IRR / Internal Rate of Return and the Conditions

This morning suddenly my former boss asked me to write him a brief about IRR and the formula.

Below is the note that i keep when i learn about IRR sometimes ago. I also attached the file i use to compute IRR. You can simply put the amount of initial outlay and potential net income for around 5 years ahead, and get the IRR computed by the spreadsheet. Hope you found this useful.

IRR or Internal Rate of Return is one of a common tool usually used for evaluating investment. In order to compute this, we have to know the amount of the initial outlay, the potential net profit for some years ahead, for example for 5 years ahead, and put the numbers in a spreadsheet like what i did. I simply use the spreadsheet function for IRR and use the result for evaluation. Too bad i cannot attach the file I usually use here as my personal library.
At least, the file is a kind of this :

Initital Outlay		-	(49,765)
Net profit	Year	1	7,464	(42,301)
Net profit	Year	2	7,464	(34,837)
Net profit	Year	3	7,464	(27,373)
Net profit	Year	4	33,000	5,627
Net profit	Year	5	33,000	38,627
		IRR	16.60%

Business Dictionary says :
IRR is the average annual return earned through the life of an investment and is computed in several ways. Depending on the method used, it can either be the effective rate of interest on a deposit or loan, or the discount rate that reduces to zero the net present value of a stream of income inflows and outflows. If the IRR is higher than the desired rate of return on investment, then the project is a desirable one. However, it is a mechanical method (computed usually with a spreadsheet formula) and not a consistent principle.

Read more: Link to Business Dictionary about IRR

Roll Bread / Roti Gulung - with Pork Luncheon Meat and Mayonnaise Filling

This amazing roll bread i made last 3rd January 2015, based on the TZ Method Bread i made before. The recipe is one of my favourite, almost become my all time recipe. The bread is so tender, soft and delicious, also it can be as soft after 3 days in room temperature.

For this roll bread, I made a pan of bread, prepare some pork luncheon meat and mayonnaise, roll the bread to be roll bread. After rolling, I wrapped the rolled bread with a baking sheet, and put on a pan to make it cool. Around 1 hour later, I cut the bread, and the result is amazing !!

Here is the picture :

I feel really proud of this one !! Too bad I haven't bought any floss beef so I can not put that as part of the filling. Next time I will, and the taste will be great, I am sure !!  :)