IRR (Internal Rate of Return)


YTM of Bond

So this is the investment growth rate you would get were you to invest the coupon at the same periodic YTM rate

Present Value

Example:

The present value of the cash flows, 1796.43x360, at an annual effective rate of 3.815% (which is 3.75% APR) is equal to the present value of getting a lump sum of 1,192,722.06 at the end of the 360 period.

Lump sum at the end
Cash Flows: 0x359,1192722
Cash flow time: 1
Rate: 3.815
Present Value: 387,900

Monthly payments of principle + interest
Cash Flows: 1796.43x360
Cash flow time: 1
Rate: 3.815
Present Value: 387,900

Interest only payments + loan amount at the end of life of loan
Cash Flows: 1212.19x359,389112.19
Cash flow time: 1
Rate: 3.815
Present Value: 387,900