I have been working through a waterfall distribution and for the hurdle calcs I came across the following formula:
X = The Target IRR
B2:M2 = range of string of cashflows
B1:M1 = range of dates
B1 = investment (start) date
N1 = final payment (end) date
I am however a little stumped as to why XNPV is used in this instance? Why are the cash flows discounted before they are compounded?
If someone could explain to me it's role in the calculation it would be a great help, I'm fairly new to all of this & (very) slowly getting there. Thanks for taking the time.