How to Calculate NPV and IRR in Excel

[@RyanOConnellCFA]

💾 Download Free Excel File: ► Grab the file from this video here: ryanoconnellfinance.com/product/financial-analysis-excel-file-for-npv-and-irr-calculations/ 🔑 Join this channel to get access to perks & support my work: kzbin.info/door/Akyj2N9kd0HtKhCrejsYWQjoin

[@andrewnguyen7778]

I just learned more in four minutes and twenty seven seconds than my finance professor. Test is tomorrow, thanks!

[@RyanOConnellCFA]

Awesome, good luck on the test Andrew!

[@veggieeater]

This was better than the textbook's explanation, and it helped me pass this week's assignment. You are truly appreciated!

[@RyanOConnellCFA]

Much appreciated and thank you for the nice feedback! I'm glad it helped

[@karibear5]

Very straightforward and informative. Thank you for such a great video!

[@ranjeet090]

I had lots of classes of PMBOK but didn't understand anything. Your video of only 2 mins helps me understand the concept such a way that I could even teach others 😂

[@RyanOConnellCFA]

That is amazing feedback, thank you for that!

[@alex_2293]

Very useful and simple as always thank you for the video. The if function makes everything look much more professional, i forgot about it.

[@RyanOConnellCFA]

Really appreciate the feedback Alex!

[@williama.rivera9414]

Very comprehensive and instructive as ever. Many thanks for share it.

[@RyanOConnellCFA]

My pleasure William, and thank you for the feedback!

[@jasonjunior1308]

Thanks a lot! It made my assignment a lot easier. ✌

[@RyanOConnellCFA]

Glad to hear that!

[@BB0015]

Thanks - really clear.

[@RyanOConnellCFA]

Glad it helped!

[@marwinb.delacruz6936]

When you say cash flow, as presented in your excel, is it the same with net cash flow?

[@joshuacicco8254]

How would I make a sheet like this, but also add another row with altered interest rates? ie: 1%, 5%, 7% etc. Is there a way to do what I want to do putting those new interest rates in a cell and rewriting the formula again? My question is kind of confusing could I email you my example?

[@RyanOConnellCFA]

Hey Joshua, leaving my answer here for future people who may have the same question: You can use the same NPV formula that you used for the existing NPV calculation but reference the interest rate (for example 1%). Lock every cell in that formula except for interest rate and then drag down so that you have the NPV calculation for each interest rate.

[@HelloThere-lo3qi]

Is CF the same as ending cash balance?

[@RyanOConnellCFA]

It is not exactly the same! CF stands for Cash Flow. It is the amount of money being paid or received at that exact time. Cash balance would be the amount of cash sitting on a companies balance sheet. A company could have cash sitting in its cash balance now that it received from a cash flow 10 years ago

[@HelloThere-lo3qi]

@@RyanOConnellCFA so is it possible to have ending balance a plus and your cash flow is a minus in year 0 (lets say its because year 0 firm need to spend for initial investment) i was so confused because its different XD

[@TheKassidy01]

What is the interest rate used? Is it for the current market within a country?

[@RyanOConnellCFA]

Hello, the interest rate used would be specific to the project itself. It is the return that investors demand for this project based on the risks

[@sarastanley8103]

Is there any chance you can make an incremental IRR video?

[@joyalmathew2720]

I think the IRR is calculated based on the discounted cash flows so that the NPV can be equated to zero. Please clarify.

[@jariusaliffwan8001]

What if there are both cash inflows and outflows for years 1, 2, 3, 4 as well? Using your example The cash flow for year 1 is 100, year 2 is 200, year 3 is 200, year 4 is 150. What if from years 1-4, there’s an outflow of $50? Do we take it as Year 1: 100-50 Year 2: 200-50 Year 3: 200-50 Year 4: 150-50 And use the same excel formula of IRR()?

[@RyanOConnellCFA]

That is exactly correct. If we make the assumption that the inflows and outflows happen on the same day then we would calculate it exactly as you have described

[@jariusaliffwan8001]

@@RyanOConnellCFAThank you so much for the quick and literally life saving response!! You really helped me out good! Thank you!!

[@RyanOConnellCFA]

@@jariusaliffwan8001 Haha it is my pleasure, glad I could be of service!

[@yazanalbashiri5634]

Thanks

[@RyanOConnellCFA]

My pleasure!

[@falmikeb]

Thanks alot 😍😍

[@TheKassidy01]

F4 isnt locking the interset rate

[@RyanOConnellCFA]

You may have an FN key somewhere else on your keyboard that you need to hold while you press it

[@mikeyhernandez9895]

Didnt work for my assignment

[@bshubo]

what if year 4 is only for 6 months?

[@Yuckyuck1870]

Prob just take the full year by .5 or 1/2

[@TheKassidy01]

Its not pasting formula's??

[@RyanOConnellCFA]

Try right clicking instead of using keyboard shortcuts