From the course: Investment Evaluation
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IRR using the Microsoft Excel formula - Microsoft Excel Tutorial
From the course: Investment Evaluation
IRR using the Microsoft Excel formula
- [Instructor] Let's see how to do the IRR calculations in Excel. I'm gonna be working out of the 04_05_Begin exercise file. Let's start with the simple IRR calculation. I'm in the simple tab of this worksheet. I want to use the data from a previous video here. Recall that Kevin needs to spend a million dollars before even starting his project and he has a negative cash initial outflow for that amount. To refresh your memory, Kevin is a business owner that has been the example decision maker throughout the course. So he has four terms in which he's receiving $400,000 each. So that's a positive cash inflow. I'm gonna assume a discount rate of 8%. I'm not sure if that's correct, but let's just have it as a placeholder and that 8% rate is fairly standard. Now I'll solve for the IRR by using the built in IRR function in cell E5, so I'll in equals sign, open up IRR and this takes two arguments. One is just a value so I"ll highlight from B4 to B8. And the next is a guess so I think kinda…
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What is IRR?1m 47s
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IRR calculation the long way3m 10s
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The case of no IRR1m 47s
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The case of multiple IRRs5m 10s
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IRR using the Microsoft Excel formula6m 24s
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Challenge 5: Calculate NPV and IRR1m 3s
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Solution 5: Calculate NPV and IRR3m 37s
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Pros and cons of IRR1m 26s
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Payback period2m 15s
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Payback period in Microsoft Excel2m 31s
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Challenge 6: Choose a project based on NPV, IRR, and payback period33s
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Solution 6: Choose a project based on NPV, IRR, and payback period4m 53s
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Real talk: IRR and payback period4m 49s
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