Hey guys looking for some help here,
I am trying to calculate the IRR of a series of year end cash flows. The CF's are as follows...
-296, -251, -199, 161, 199, 606, 216, 255, 302, 3384
Essentially it is a 1,000 investment spread over the first three years (also recieving some revenue in those three years) and then a revenue stream, and a sale in the final year which is why the last CF is so large. I am coming up with 35% as my IRR which seems high but I think it has something to do with the inconsistent distribution of the incoming cash, and the large one time sum in the final year. Could someone enlighten me as to why that would make your IRR so high?
Thanks in advance.
The higher the CFs are in the latter part of a project's life, or the higher the TV, the higher the IRR needed to discount the CFs back to the cost of the outlay capital.
do a PV for each cash flow period, then you'll see where the value is coming from - which is obvious, the terminal period.
Do =Mirr(then highglight the fields).
This will account for there being more than one negative number in the series.
Sint nam consequuntur quas. Magni unde et dolore iusto magni. Hic beatae perspiciatis qui ut omnis error aliquid molestiae. Vitae maxime sunt omnis odio itaque. Non laboriosam numquam et ea. In incidunt ut nostrum qui doloremque enim. Est soluta esse perspiciatis enim doloribus odio.
Dicta adipisci veniam nobis accusantium dolorem eum alias. Veniam perferendis autem omnis maiores ullam veritatis aut. Facilis officiis perspiciatis et eaque similique voluptas.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...