In this first workout, we're told that an investment is made in a project during the calendar year. The cashflow returns from the project happen regularly at year ends, calculate the IRR and MPV using the XIRR and XNPV functions to take into account the non periodic dates. So let's have a look at these dates. Our first date, the date of the investment, is made on the 19th of October, year 60. So this presents a small problem because our return, the first return is only roughly six weeks later, December of the same year thereafter. My returns are periodic, but because I've got this non periodic date in the first one being the investments, it means I can't use my traditional NPV and my IRR functions. But what we can do is use the XNPV function. So if I type in equals XNPV, open brackets, I can see that right up the top here in the white box. That's what shown me The syntax Excel's asking me for the rate or the discount rate, I'm gonna choose 10%. I press a comma, and the next thing it's asking me for are the values. Now that's the cash flows, and I can choose those 1, 2, 3, 4, 5 comma again. And then it asks me for the dates. Now these dates that we've got here, they've been put into Excel and formatted the date. So Excel already knows what they represent. I can close the brackets on that and I get an NPV value of 421.

Next I can try and calculate the IRR, and I'm going to use the XIRR to do that equals XIRR. Open brackets, and again, up at the top in that white box, I'm being asked for the values. So I'll click on those cash flows again.

Then it asks me for the dates, but then it asks me for a guess, XIRR could give me multiple IRRs, could give me a negative IRR.

I already know that when the discount rate is 10%, I get a positive NPV. So I know that my IRR should be higher than this. I'm going to choose this 11%.

So I'll now close bracket, press enter, And it tells me we've got an internal rate of return of 19.9%. Fantastic. Let's have a go at a second workout here. We're told that an investment is made. The dates of the resulting cash flows are non periodic. Calculate the IRR and MPV using the XIRR and XMPV functions. So let's look at these dates. The initial investment is made on the 24th of April, year 50, and the first return is on December of that year, but then we don't have another return until June, year 52. Then a return in December 52 and a final return a couple of years later, 28th of February, year 55. So these non periodic cash flows require us to use XNPV and XIRR. So let's use that XNPV function. Open the brackets. It firstly asks me for the rate that was the 12%.

Now it's asking me for the values. I can select my cash flows.

And lastly, it's asking me for the dates. Again, just go up to the top and click on those dates, close the brackets. Do we get a positive net present value? We do. It comes to 184.1.

Lastly, let's have a go at the XIRR. So type in the function. It asks me for the values, I can select them.

Then it asks me for the dates. I can select them.

And then finally it asks me for a guess. Now again, because the net present value was positive, when the discount rate was 12%, I know that my IRR is gonna be slightly higher. So I'll choose a figure of 13% as my guess, and then Excel will work out the exact number, close the bracket press enter, and it comes to 13.8%.