How to Calculate NPV and IRR in Excel
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- Опубликовано: 30 июл 2024
- Ryan O'Connell, CFA, FRM shows how to calculate NPV and IRR in Excel.
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Chapters:
0:00 - Define the Expected Cash Flows
0:51 - Calculate the Present Value (PV) of Each cash Flow
1:46 - Calculate the Net Present Value (NPV) of the Project
2:14 - Calculate Net Present Value (NPV) using NPV() Excel Function
2:38 - Calculate Internal Rate of Return (IRR) Using IRR() Excel Function
2:54 - NPV and IRR Accept or Reject Rule
3:27 - Experimenting With Different Assumptions
*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC
![IRR vs. NPV - Which To Use in Real Estate [& Why]](/img/1.gif)
💾 Download Free Excel File:
► Grab the file from this video here: ryanoconnellfinance.com/product/financial-analysis-excel-file-for-npv-and-irr-calculations/
🎓 Tutor With Me: 1-On-1 Video Call Sessions Available
► Join me for personalized finance tutoring tailored to your goals: ryanoconnellfinance.com/finance-tutoring/
I just learned more in four minutes and twenty seven seconds than my finance professor. Test is tomorrow, thanks!
Awesome, good luck on the test Andrew!
This was better than the textbook's explanation, and it helped me pass this week's assignment. You are truly appreciated!
Much appreciated and thank you for the nice feedback! I'm glad it helped
Very straightforward and informative. Thank you for such a great video!
I had lots of classes of PMBOK but didn't understand anything. Your video of only 2 mins helps me understand the concept such a way that I could even teach others 😂
That is amazing feedback, thank you for that!
Very useful and simple as always thank you for the video. The if function makes everything look much more professional, i forgot about it.
Really appreciate the feedback Alex!
Very comprehensive and instructive as ever. Many thanks for share it.
My pleasure William, and thank you for the feedback!
Thanks a lot! It made my assignment a lot easier. ✌
Glad to hear that!
Thanks alot 😍😍
When you say cash flow, as presented in your excel, is it the same with net cash flow?
Is there any chance you can make an incremental IRR video?
What is the interest rate used? Is it for the current market within a country?
Hello, the interest rate used would be specific to the project itself. It is the return that investors demand for this project based on the risks
Is CF the same as ending cash balance?
It is not exactly the same! CF stands for Cash Flow. It is the amount of money being paid or received at that exact time. Cash balance would be the amount of cash sitting on a companies balance sheet. A company could have cash sitting in its cash balance now that it received from a cash flow 10 years ago
@@RyanOConnellCFA so is it possible to have ending balance a plus and your cash flow is a minus in year 0 (lets say its because year 0 firm need to spend for initial investment) i was so confused because its different XD
What if there are both cash inflows and outflows for years 1, 2, 3, 4 as well?
Using your example
The cash flow for year 1 is 100, year 2 is 200, year 3 is 200, year 4 is 150.
What if from years 1-4, there’s an outflow of $50?
Do we take it as
Year 1: 100-50
Year 2: 200-50
Year 3: 200-50
Year 4: 150-50
And use the same excel formula of IRR()?
That is exactly correct. If we make the assumption that the inflows and outflows happen on the same day then we would calculate it exactly as you have described
@@RyanOConnellCFAThank you so much for the quick and literally life saving response!! You really helped me out good! Thank you!!
@@jariusaliffwan8001 Haha it is my pleasure, glad I could be of service!
Didnt work for my assignment
F4 isnt locking the interset rate
You may have an FN key somewhere else on your keyboard that you need to hold while you press it
Its not pasting formula's??
Try right clicking instead of using keyboard shortcuts