Microsoft Office Tutorials and References
In Depth Information
Figure 12-7: The NPV function can accept multiple positive and negative cash flows.
The positive NPV indicates that the company should invest in the equipment and start producing the new
product. If it does, and the estimates of gross margin and expenses are accurate, the company will earn better
than 10% on its investment.
Using the IRR Function
Excel's IRR function returns the discount rate that makes the NPV of an investment zero. In other words, the
IRR function is a special-case NPV.
The syntax of the IRR function is