How to Calculate IRR in Excel

In this video I’m going to show you how to calculate the internal rate of return for a project in Excel.
So I’ve got 6 projects here. For each project, there’s a single cash outflow at the beginning of the project (year 0). This is followed by a series of cash inflows.
Now to calculate the IRR of a project, just type =IRR and highlight the series of cash flows. Excel gives you the option to guess the IRR; if you don’t enter anything, it guesses 0.1 (or 10%) until it finds the rate that makes the project’s NPV equal to zero.
Now you can see that the IRR for project 1 is 6.73%. This is the time-adjusted, annual rate of return for that project. Dragging the fill handle to the right shows you the IRR for each of the other projects. Now if the company’s hurdle rate was 20%, you would only accept projects 5 and 6.
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[@brendanbaumgarten1902]

Just the video tutorial I needed for my finance homework! Thank you Professor!

[@Edspira]

Glad to hear that Brendan! I hope things are going well at IWU!

[@Lexyvil]

Definitely what I needed! Thank you sir! Very well explained.

[@boundsean]

here you go again saving me on another homework question and teaching me thank you for doing these

[@caseyzimmerman369]

what if my first two years are negative? can i use same formula?

[@asmborhanulhoda7185]

Thank you so much, I learned a lot, well explained

[@goobsmiles]

Very helpful. Thank you.

[@shervingtonkerr7323]

Thank you

[@jariusaliffwan8001]

1:45
68.05%
What if I want daily returns? Will it work if I just divide by number of days?

[@111119745]

helpful❤

[@joebriggs8422]

Thanks! Allowed me to quickly determine IRR for potential projects with monthly data.

[@Edspira]

Glad it was helpful!