From the course: Investment Evaluation

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Solution 5: Calculate NPV and IRR

Solution 5: Calculate NPV and IRR - Microsoft Excel Tutorial

From the course: Investment Evaluation

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Solution 5: Calculate NPV and IRR

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- Let's crack through this challenge here. If you want the fully worked out file, take a look at 04 07 Solution 5 from the exercise files. Alright, let's start with a simple tab. And right here in cell E4, my assumed discount rate is .05. So I'm gonna type that in. My internal rate of return, I can't do anything about that yet. So we need to figure out what the Net Cash Flows actually are. I have an initial overhead of one million. So that's automatically negative one million in time zero. And then I have a duration of 10 years. So that looks right. And my annual cash flows are 125 thousand dollars. So let me go ahead and put in that information in cell B5. And then I'll double-click and auto-fill the rest. To calculate the IRR in cell E5, I simply type an equal sign, type up IRR, and open the parenthesis, and take in all the values from B4 to B14, close parenthesis, hit enter. My IRR is four percent. Now let's figure out what the Net Present Value is. So the NPV is equal to NPV, open…

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