How Do You Calculate IRR In Excel?
Microsoft Excel is spreadsheet software used for everything from basic calculations to complex computations. One of the features of Excel is its built-in formulas. One of the complex calculations it can do is IRR (internal rate of return). Businesses use IRR to determine whether or not to undertake a project. Open Microsoft Excel. Create a two-column table–one column titled “Year” and the second column titled “Cash flow.” For this example, assume $75,000 has been invested in a business. The return from that $75,000 will be tracked over a 10-year period. Initially, the return on the investment will be small but through time it should grow. Enter the numbers 1 through 10 in the “Year” column. Enter the following numbers for each of the years: “-75,000, 2,000, 4,000, 5,000, 7,000, 10,000, 20,000, 100,000, 250,000, 325,000”. The “-75,000” should be in the row for Year 1; 2,000 should be in the row for Year 2, and so on. The “-75,000” is entered because that is the amount spent/invested in
