### ATS Kocoon, ATS, Sector 109, Gurgaon

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amit.bhalla

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- Sir first of all in my matrix

when cost price is 3500 and selling price after 4 years is 7000 my IRR is 18.90% (see table carefully) not 12.9% as mentioned by you

baki sir agar lala maths karu

jara 3500 pain 25% annual return calculate karo = 3500*(1.25)^4 = answer will be 8544 not 7000

to have an simple interest of 25% the resale price after four years will be 8544 and not 7000.

isilie simple interest nahi lagana chahiye as it does not take into account time value of money/dates of paymentOriginally Posted by vb2309Amit!

Bhai...mere maths thore kamjor hai ;-)

Jara help karo please....

3500 pe Libya hua flat agar 7000 main bike 4 saal main 100 per cent growth hui...double hua bhai...to hum not so educated in finance think ke Simple Return is 25 per cent mota mota

Jara please batao IRR IS 12.9 only why ?

Also what is the cost of money component taken in ur calculation pease ?

Amit what will be the return if by cost f capital is 5 per cent per year please ?

Can u kindly e mail me the excel ? PleaseCommentQuote1Flag - Rahul the diffference here will be

People in India will compare their IRR with their cost of capital (9-10%), where as people is US/Europe will compare their IRR with their cost of capital (3-4%)

So Alpha will be higher in the case of US/Europe because of lower cost of capital.

Lets suppose IRR of ATS project is 15%

So Alpha for you is 15% - 4% (cost of capital) = 11%

Alpha for people in India will be 15% -9%(Cost of capital) = 4%

Alpha - Alpha is a risk-adjusted measure of the so-called active return on an investment. It is the return in excess of the compensation for the risk borne, and thus commonly used to assess active managers' performancesOriginally Posted by rahul2011amit bro, thanks,

i just wanted to understand as i wanted o calculte npv considering different cost of capital ( as it is different for some in US or in europe than some one in India) ..

considering that the cost of capital in Europe is 3 percent ( even less if we consider opportunity loss of 1.5 percent then DP looks even better) .

With your calculations of IRR is also clear...its just the other way i wanted to calculate ...CommentQuote0Flag - Originally Posted by amit001The best way to judge IRR is that it should be compared with the cost of capital

IF your IRR is greater than your cost of capital (lets say FD rate) then the investment is profitable

Rule is:

IRR > Cost of capital = Invest

IRR < Cost of Capital = Do not Invest

Also if you are comparing multiple projects/ventures - you can also rank the IRR of different projects.

Hope it helps

Amit001

I have seen CLP is giving much better IRR than DP.I was just calculating IRR for my previous investments. It is coming 19% ( Delhi & DP ) vs 31 % ( Gurgaon & CLP )..CommentQuote0Flag - Originally Posted by amit001Sir first of all in my matrix

when cost price is 3500 and selling price after 4 years is 7000 my IRR is 18.90% (see table carefully) not 12.9% as mentioned by you

baki sir agar lala maths karu

jara 3500 pain 25% annual return calculate karo = 3500*(1.25)^4 = answer will be 8544 not 7000

to have an simple interest of 25% the resale price after four years will be 8544 and not 7000.

isilie simple interest nahi lagana chahiye as it does not take into account time value of money/dates of payment

Amit

Thank you hai jee

Hum to very simple ho Gaye

4 SE bhag kar diye the

Leaking ek Kaam jaroor kare...invest hum kar diye.....ab analysis kar raha Hun.....I should have analysed numbers before....

Simple SE funds pe invet kar deta Hun.....anyways.....thanks...it helps a lot....

Jara NPV bhe batiyega please

Once again....sir Ji.....drink on me ...ab Jara yeh valed excel email kar dain please....

104 main investment ke taught process main ma'am ayegi...

Aap please mere request pe gaur kariyega....,invest....400 Psf ki mat socho...CLP pe ATS Kocoon ya 104 main le lo.....ya Chintels is a good bet tooCommentQuote0Flag - Yes tinesha,

As per me also CLP is always better than DP. Not just from numbers point of view but also from risk POV... DP for UC projects is very risky. Also not to forget liquidity is much lower in case of DP

Unless a builder has a very aggresive plan and the DP discount is like 15-18% (as compared to the usual 10-12%)CommentQuote1Flag - Chalo VB sir - a thoda office ka kam kar leta hoon varna naukari jaegi

Will write on NPV later and will email the file as well...CommentQuote1Flag - Originally Posted by pmall101I recently bought a 1745 unit and am contemplating on DP vs CLP..

1) any suggestion? purely on the basis of payouts and interest payments.

2) has ATS published construction schedule? for eg March 2012 - Excavation, June 2012 - Basement, etc, etc..

3) somewhere in this post, i read the tentative possession is around Mid 2015. is that correct? 3 yrs from now + 6 mths grace

Here on numbers it looks that CLP IS BETTER

However Amit ( our financial asset on this forum) says that in ATS the difference s less as ATS pay,ent plan takes 50 per cent in a year.CommentQuote0Flag - Originally Posted by amit001Chalo VB sir - a thoda office ka kam kar leta hoon varna naukari jaegi

Will write on NPV later and will email the file as well...

Thank u hai bhai advance main..CommentQuote0Flag - Originally Posted by amit001Sir IRR Calculations do not consider any discount factor.

Discount factor/cost of capital is considered for calculating NPV.

IRR/XIRR itself is the discounted cash flow rate of return (DCFROR) or the rate of return (ROR). In more specific terms, the IRR of an investment is the discount rate at which the net present value of costs (negative cash flows) of the investment equals the net present value of the benefits (positive cash flows) of the investment.

In little simple words - IRR is annualized effective compounded return rate

Amit....

When u r free for then...

Wiki says :

The internal rate of return on an investment or project is the "annualized effective compounded return rate" or "rate of return" that makes the net present value (NPV as NET*1/(1+IRR)^year) of all cash flows (both positive and negative) from a particular investment equal to zero.

In more specific terms, the IRR of an investment is the discount rate at which the net present value of costs (negative cash flows) of the investment equals the net present value of the benefits (positive cash flows) of the investment.

Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a project's internal rate of return, the more desirable it is to undertake the project. Assuming all projects require the same amount of up-front investment, the project with the highest IRR would be considered the best and undertaken first.

A firm (or individual) should, in theory, undertake all projects or investments available with IRRs that exceed the cost of capital. Investment may be limited by availability of funds to the firm and/or by the firm's capacity or ability to manage numerous projects.

.....

What discount rate are they talking of ?CommentQuote0Flag - Originally Posted by vb2309Here on numbers it looks that CLP IS BETTER

However Amit ( our financial asset on this forum) says that in ATS the difference s less as ATS pay,ent plan takes 50 per cent in a year.

Correct, i did my own calculation and the payout for DP vs CLP in case of ATS Kocoon for 36 mths period (provided the possession happens in 36 mths) comes out almost same, with +/- 1-2 lakhs.. however, if the construction schedule changes or changes to the interest rates/ any other external factors, then the calculation would change drastically.CommentQuote1Flag - Originally Posted by amit001Sir first of all in my matrix

when cost price is 3500 and selling price after 4 years is 7000 my IRR is 18.90% (see table carefully) not 12.9% as mentioned by you

baki sir agar lala maths karu

jara 3500 pain 25% annual return calculate karo = 3500*(1.25)^4 = answer will be 8544 not 7000

to have an simple interest of 25% the resale price after four years will be 8544 and not 7000.

isilie simple interest nahi lagana chahiye as it does not take into account time value of money/dates of payment

Rahul and Amit,

8544 is what wd be great then..

8544 yaar rahkna bhai

IRR is high funds for me....

SI AND CRR are what I understand... The old school....also IRR for me is higher as my Cost Of Capital is lessor

My estimate for 2016 is 8000 ...... Ur estimate was 9000...CommentQuote0Flag - Originally Posted by pmall101Correct, i did my own calculation and the payout for DP vs CLP in case of ATS Kocoon for 36 mths period (provided the possession happens in 36 mths) comes out almost same, with +/- 1-2 lakhs.. however, if the construction schedule changes or changes to the interest rates/ any other external factors, then the calculation would change drastically.

I agree mate.....

The say 36 months plus 6 months grace in BBA

aap 42 months pe calcite karo

May I please ask at what rate DP and CLP u are considering ?CommentQuote0Flag - Originally Posted by vb2309Amit....

When u r free for then...

Wiki says :

The internal rate of return on an investment or project is the "annualized effective compounded return rate" or "rate of return" that makes the net present value (NPV as NET*1/(1+IRR)^year) of all cash flows (both positive and negative) from a particular investment equal to zero.

In more specific terms, the IRR of an investment is the discount rate at which the net present value of costs (negative cash flows) of the investment equals the net present value of the benefits (positive cash flows) of the investment.

Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a project's internal rate of return, the more desirable it is to undertake the project. Assuming all projects require the same amount of up-front investment, the project with the highest IRR would be considered the best and undertaken first.

A firm (or individual) should, in theory, undertake all projects or investments available with IRRs that exceed the cost of capital. Investment may be limited by availability of funds to the firm and/or by the firm's capacity or ability to manage numerous projects.

.....

What discount rate are they talking of ?

Amit bro: this is the most important line: IRR can fail in many scenarios:

eg: Lending and borrowing

Case A : You pay out initially Rs 1000 C0= -1000, and then after 1 yr yiu are paid Rs 1500 (C1= +1500) , you lend the money at 50% ..IRR here is 50% where as NPV is +364

case B: you get 1000 initially, you borrow at 50% and you get a negative cash flow of -1500 in year 1...IRR is again 50% but NPV is -364

IRR rules fails here.

There are many case in which IRR rule is not applicable eg

a) Multiple rate of returns scenarios

b)when projects are mutually exclusive:

Project A: Cash flow year0: -10000, cash flow year1= +20000 IRR% is 100%

NPV at 10% is +8182

Project B: cash flow year0: -20000, cash flow year1= +35000, IRR 75% but NPV is 11818

Here you can see though IRR is higher in project A its NPV is lower and hence project is better investment

There are many other reasons that now a days.. NPV is preferred over IRR .

I am not saying IRR is bad but has many pit falls.so better use NPV for multi project evaluations.

I am sure you will agree.CommentQuote0Flag - Rahul - what you are saying is theoritically correct

But how would you use NPV for evaluating a RE project?

You can use NPV in one way

if you have two pejects which you want to compare.. You know the current costs and you can assume future costs and calculate the NPV of the project if the NPV of a project is higher - one should choose that.

In NPV you can assume your cost of capital as 3/4%.

In majority of cases NPV and IRR gives the same results.

IRR is not useful only in the case where cash flow could be negetive in one year and then positive. IN RE projects since you will sell only once there can not be an interim negeitive cash flow (the only negetive cash flow will happen if you sell below cost price, but that nit an interim cash flow that is a final cash flow

hence i can say with utmost certainity that in the kind of projects we are evaluating NPV and IRR will give the SAME RESULTSCommentQuote0Flag - Originally Posted by amit001Rahul - what you are saying is theoritically correct

But how would you use NPV for evaluating a RE project?

You can use NPV in one way

if you have two pejects which you want to compare.. You know the current costs and you can assume future costs and calculate the NPV of the project if the NPV of a project is higher - one should choose that.

In NPV you can assume your cost of capital as 3/4%.

In majority of cases NPV and IRR gives the same results.

IRR is not useful only in the case where cash flow could be negetive in one year and then positive. IN RE projects since you will sell only once there can not be an interim negeitive cash flow (the only negetive cash flow will happen if you sell below cost price, but that nit an interim cash flow that is a final cash flow

hence i can say with utmost certainity that in the kind of projects we are evaluating NPV and IRR will give the SAME RESULTS

Thanks Bro.. We both understand each other..CommentQuote0Flag