Hi folks,
Ran into a kind of a tricky situation while calculating the IRR on a road project.
I ran a basic IRR calculation for the project which included the initial Capex and then the positive cashflows. So if the Capex is 100 and the cashflows from year 2 to year 10 are 25, my irr on excel is =irr (-100,25,25,25....). Simple enough.
However, the client believes the IRR calculation is wrong and should also include the NPV of the project! So if I discount the above cashflows at say 10% and come up with an NPV of say 50, my IRR formula should read =irr (-50,-100,25,25,25...).
Does this make any sense? He believes that is the IRR for the project.
Any views would help.
Non nobis laboriosam nemo doloremque sequi. Quod rerum facere eos exercitationem dolorum maiores labore voluptas. Ut excepturi error modi.
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...