Microsoft Office Tutorials and References

In Depth Information

The IRR is the rate at which the discounting of the cash flow produces an NPV of zero. The formula in cell D23

uses the IRR in an NPV function applied to the same cash flow. The NPV discounting at the IRR (per month) is

$0.00 — so the calculation checks.

Figure 12-8:
The IRR returns the rate based on the cash flow frequency and should be converted into an an-

nual rate.

Geometric growth rates