Using Excel to calculate NPV and IRR

[@jdean2131]

Best explanation I’ve seen to date. Nicely Done ✅

[@petrussd8881]

Very Short and straight to the point, you saved my life @09:40 when i a have an exam @12:00. Thank you

[@Sunpg]

Great demonstration, thank you very much. Very very helpful.

[@sarthakdhupar3774]

Very helpful!

[@zanius90272]

How do we find the Discount Rate? For 2022 would that just be equal to the Interest Rate of 7%??

[@jordanweambo7955]

great explanation, one question how do we calculate cash outflow? or is it same as Present value?

[@milind131]

Nice one

[@great87]

Thanks

[@ghallifadlilwafi2962]

nice one..

[@Raja-up6yv]

Sir, In an Excel Sheet, for how many 'Number of entries' in Rows one can calculate IRR ?

[@danthehokie]

Hello. I have never seen any indication that there is a 'limit' to the number of cash flows that Excel can handle for the IRR calculation. The function does assume that the cash flows are equally spaced in time and occur at the end of the period, but as far as I know there is no bound of how many cash flows can be used.

[@Raja-up6yv]

@@danthehokie Thanks for your response. Would you try with entries more than 40. My experience, it does not work.

[@Sarah-nn9sc]

Hi how can I find NPV or IRR of an asset/security that has varying discount rates(interest rate) each year.. thanks

[@danthehokie]

For NPV, you’d have to treat each cash flow separately and run the NPV function on each with the different discount rates. For example, if Year 1 net is $10,000 and the rate is 5% and year 2 net is 15,000 and the rate is 10%, run NPV for $10,000, 1 period, 5%, and NPV for $15,000, 2 periods, 10%. This would be repeated for every individual cash flow/rate. [Note if you don’t care about Excel, you could also use a PV factor table (found online or in finance-acct textbooks) to discount each cash flow separately]. (Not that IRR determines the rate of return of the project overall, so any project only has one single IRR).

[@Azam_Pakistan]

Does the IRR formula automatically generate present values for inflows and outflows ? Secondly how to calculate IRR for a one year or a one period project?

[@danthehokie]

For a one period project, you could just use the IRR formula and two values - the initial investment and the net cash inflow in the one and only period. (In other words, the first two cells used in this example for IRR). Note that the IRR formula determines the rate of return that would make the present value of the inflows exactly equal to the present value of the outflows if you discounted them all, so it won't generate (output) for the present value of the in/outflows.

[@Azam_Pakistan]

@@danthehokie Thanks a lot for the detailed and clear reply.

[@nancylindfield1125]

thank you

[@ranjeeshsathuraman7204]

Thank u . Saved my black ass (Y)