Enter cash flow at time (t)

  

Enter Discount Rate % (i)

  
      
Calculate the Internal Rate of Return (IRR) using the cashflows at the time entered using a guess and check method

Try using 1% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.010003,465.35
23,500.001.020103,431.04
33,500.001.030303,397.07

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,465.35 + 3,431.04 + 3,397.07
NPV = 2,293.46

Try using 2% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.020003,431.37
23,500.001.040403,364.09
33,500.001.061213,298.12

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,431.37 + 3,364.09 + 3,298.12
NPV = 2,093.58

Try using 3% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.030003,398.06
23,500.001.060903,299.09
33,500.001.092733,202.99

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,398.06 + 3,299.09 + 3,202.99
NPV = 1,900.14

Try using 4% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.040003,365.38
23,500.001.081603,235.95
33,500.001.124863,111.50

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,365.38 + 3,235.95 + 3,111.50
NPV = 1,712.83

Try using 5% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.050003,333.33
23,500.001.102503,174.60
33,500.001.157633,023.42

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,333.33 + 3,174.60 + 3,023.42
NPV = 1,531.35

Try using 6% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.060003,301.89
23,500.001.123603,114.99
33,500.001.191022,938.66

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,301.89 + 3,114.99 + 2,938.66
NPV = 1,355.54

Try using 7% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.070003,271.03
23,500.001.144903,057.04
33,500.001.225042,857.05

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,271.03 + 3,057.04 + 2,857.05
NPV = 1,185.12

Try using 8% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.080003,240.74
23,500.001.166403,000.69
33,500.001.259712,778.42

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,240.74 + 3,000.69 + 2,778.42
NPV = 1,019.85

Try using 9% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.090003,211.01
23,500.001.188102,945.88
33,500.001.295032,702.64

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,211.01 + 2,945.88 + 2,702.64
NPV = 859.53

Try using 10% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.100003,181.82
23,500.001.210002,892.56
33,500.001.331002,629.60

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,181.82 + 2,892.56 + 2,629.60
NPV = 703.98

Try using 11% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.110003,153.15
23,500.001.232102,840.68
33,500.001.367632,559.17

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,153.15 + 2,840.68 + 2,559.17
NPV = 553.00

Try using 12% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.120003,125.00
23,500.001.254402,790.18
33,500.001.404932,491.23

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,125.00 + 2,790.18 + 2,491.23
NPV = 406.41

Try using 13% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.130003,097.35
23,500.001.276902,741.01
33,500.001.442902,425.67

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,097.35 + 2,741.01 + 2,425.67
NPV = 264.03

Try using 14% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.140003,070.18
23,500.001.299602,693.14
33,500.001.481542,362.41

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,070.18 + 2,693.14 + 2,362.41
NPV = 125.73

Try using 15% discounting each cash flow back to time 0

PVt  =  Ct
  (1 + i)t

where Ct is the cash flow at time t and i is the discount rate

TimeCashflow (Ct)(1 + i)tPVt = Ct/(1 + i)t
0-8,000.001.00000-8,000.00
13,500.001.150003,043.48
23,500.001.322502,646.50
33,500.001.520882,301.30

Determine NPV

NPV = ΣPVt
NPV = -8,000.00 + 3,043.48 + 2,646.50 + 2,301.30
NPV = -8.72

Since our 15% IRR resulted in a negative NPV, we use the last interest rate that resulted in a positive NPV which was 14%


IRR = 15%


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What is the Answer?
IRR = 15%
How does the Net Present Value (NPV) - Internal Rate of Return (IRR) - Profitability Index Calculator work?
Free Net Present Value (NPV) - Internal Rate of Return (IRR) - Profitability Index Calculator - Given a series of cash flows Ct at times t and a discount rate of (i), the calculator will determine the Net Present Value (NPV) at time 0, also known as the discounted cash flow model.
Profitability Index
Also determines an Internal Rate of Return (IRR) based on a series of cash flows. NPV Calculator
This calculator has 1 input.
What 1 formula is used for the Net Present Value (NPV) - Internal Rate of Return (IRR) - Profitability Index Calculator?
NPV = ΣPVt
PVt = Ct/(1 + i)t
What 6 concepts are covered in the Net Present Value (NPV) - Internal Rate of Return (IRR) - Profitability Index Calculator?
cash flow
the total amount of money being transferred into and out of a business, especially as affecting liquidity.
discount rate
the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows. Key Takeaways.
interest
payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate
net present value (npv) - internal rate of return (irr) - profitability index
present value
the value in the present of a sum of money, in contrast to some future value it will have when it has been invested at compound interest.
PV = FV/(1 + i)n
where I is the interest rate per period, PV = Present Value, and FV = Future Value
return
a performance measure used to evaluate the efficiency of an investment or compare the efficiency of several investments.
Net Present Value (NPV) - Internal Rate of Return (IRR) - Profitability Index Calculator Video

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