Description

This financial model is designed to help assess the effectiveness of any investment project. The program automatically calculates the common indicators of investment effectiveness, such as NPV, IRR, MIRR, PI and DPP. A unique and remarkable feature of this program is that it automatically calculates the internal rate of return (IRR) of an investment project. As you know, the value of IRR is an irrational number and for its approximate calculation it is necessary to choose a high value of the discount rate at which the NPV of the project becomes negative. It is no a secret that even the built-in MS Excel function for IRR calculation forces the user to go through this procedure. However, a specially developed macro in this financial model frees the user from multistage calculations and calculates the IRR indicator independently. Also in this program it is possible to set and freely change the forecast horizon from 3 to 10 years. It should be noted that the procedure for forecasting inflows and outflows, as well as the choice of the discount rate, is not provided for by this model. The specified preparatory work shall be carried out by the user outside this program.


Methodology sources:

  1. E.R. Yescombe. Principals of Project Finance. Second edition. © YCL Consulting Ltd. 2014.
  2. Derek H. Allen. Economic Evaluation of Projects – A Guide. Third edition. Institution of Chemical Engineers. – 1991.
  3. Isaac Gottlieb. Next generation Excel. Modeling in Excel for Analysts and MBAs. – John Wiley & Sons (Asia) Pte. Ltd. 2010.

Author

Vadim Sobkin (www.economist-mate.com)

Created

05.09.2018

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