Using Excel for Business and Financial Modelling by Danielle Stein Fairhurst

Using Excel for Business and Financial Modelling by Danielle Stein Fairhurst

Author:Danielle Stein Fairhurst
Language: eng
Format: epub
ISBN: 9781119520351
Publisher: Wiley
Published: 2019-04-01T00:00:00+00:00


HOW TO CALCULATE THE IRR

Using the same investment assumptions as in the previous example, the rate of return on the initial investment can be calculated as follows:

Select the IRR function.

At the Values prompt, select or specify the cells that contain the requested information.

Leave the Guess prompt blank at this stage. (See the section “The Problem with IRR” for greater detail on when and why you need to include a guess.) In this instance, all the cash flows are positive, so we don't need to enter a guess.

Click on the OK button and the yield (IRR) is displayed. The formula should be: .

The result of your formula should be 13.3 percent and look something like Figure 6.49.

FIGURE 6.49 Using the IRR Function



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