From the course: Investment Evaluation

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IRR using the Microsoft Excel formula

IRR using the Microsoft Excel formula - Microsoft Excel Tutorial

From the course: Investment Evaluation

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IRR using the Microsoft Excel formula

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- [Instructor] Let's see how to do the IRR calculations in Excel. I'm gonna be working out of the 04_05_Begin exercise file. Let's start with the simple IRR calculation. I'm in the simple tab of this worksheet. I want to use the data from a previous video here. Recall that Kevin needs to spend a million dollars before even starting his project and he has a negative cash initial outflow for that amount. To refresh your memory, Kevin is a business owner that has been the example decision maker throughout the course. So he has four terms in which he's receiving $400,000 each. So that's a positive cash inflow. I'm gonna assume a discount rate of 8%. I'm not sure if that's correct, but let's just have it as a placeholder and that 8% rate is fairly standard. Now I'll solve for the IRR by using the built in IRR function in cell E5, so I'll in equals sign, open up IRR and this takes two arguments. One is just a value so I"ll highlight from B4 to B8. And the next is a guess so I think kinda…

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