Use Excel to make a project selection decision based on internal rate of return.
- [Instructor] While net present value…has a lot of benefits and it's clearly very useful…for picking the best project in many circumstances,…it can also be unintuitive.…Think about what net present value really means.…It's the profit on a project for the company…after taking into account its cost and its discount rate,…but over a very long period of time.…When we talk about a profit of $5,000 or $100,000…on a project over 30 years,…it's not really clear what that means for us today…and that's where IRR comes in.…
In a corporate setting, IRR or Internal Rate of Return…is very commonly used,…perhaps even more commonly used than net present value.…I'm in the 02_04_Begin Excel file.…So we wanna use our internal rate of return…to better understand whether this is a project…we'd be interested in pursuing.…IRR is a percentage.…NPV is a dollar value.…NPV tells us the dollar value in profit…a particular project represents.…
In other words, how much is added to shareholder…or owner wealth from a particular project.…In contrast, IRR tells us the profit rate…
- Capital budgeting in Excel
- Using Excel in project selection
- Analyzing capital structure using Excel
- Estimating weighted average cost of capital (WACC)
- Applying Excel to operational budgeting
- Cash flow budgeting
- Stress test tools for budgets
Skill Level Intermediate
Excel 2016: Power Query (Get & Transform)with Oz du Soleil1h 49m Intermediate
Excel: Analyzing and Visualizing Cash Flowswith Curt Frye1h 16m Intermediate
1. Critical Tasks in Corporate Finance
2. Project Selection in Excel
3. WACC and Capital Structure in Excel
4. Operational Budgeting in Excel
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