Many businesses take cash flows from several sources, such as asset sales or retail revenues, to fund other investments. These revenues don’t always come in on a regular monthly or annual schedule, so you can’t use the IRR function to calculate internal rate of return. Instead, you can use the XIRR function to calculate the internal rate of return for cash flows that occur at irregular intervals.
- [Voiceover] Many businesses take cash flows…from several sources, such as asset sales,…or retail revenues, to find other investments.…These revenues don't always come in on a regular monthly,…or annual schedule, so you can't use the IRR…function to calculate internal rate of return.…Instead, you can use the XIRR function…to calculate the internal rate of return…for cash flows that occur at irregular intervals.…I will show you how to do that in this movie.…My sample workbook is called IrregularIRRSchedule_03_07.…
You can find it in the chapter 3 folder…of the exercise files collection.…I have three sets of values in this workbook.…The first are the cash flows.…We see that we have an initial investment of $90,000.…That's an outflow, or a negative amount.…It's debited from our account,…so that means it is a negative number here.…We have some positive cash flows,…and we also have a negative cash flow here, of $31,000,…and so on, down to our final…incoming revenue of 15, 20, and 40,000.…
To the right is a column of dates that…
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating prices and yields of securities with odd periods
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
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