On a $2k investment you're making millions.

The IRR of 7688% is probably correct (I didn't check) and for the NPV you
would input 76.88. (Which is 7688%)

Nothing is wrong other than what are probably some very unrealistic
assumptions.

PC

"Richard Buttrey" wrote in
message ...
On Thu, 29 Sep 2005 15:39:02 -0700, "Raymond Gallegos"
wrote:

I am getting conflicting (and confusing) results using the IRR and NPV
functions
in Excel. Here is the cashflow data for each year:

Year 1: (2,057)
Year 2: 155,849
Year 3: 333,756
Year 4: 459,403
Year 5: 592,126
Year 6: 725,751
Year 7: 860,094
Year 8: 976,671
Year 9: 1,036,326
Year 10: 5,247,233

When I compute the IRR I come up with 7688%. However, knowing that the
IRR should be the interest rate which makes the NPV = 0, when I use the
NPV
calculation I should be using 76.88%, not 7688%. Therefore, I am
assuming
I must divide the IRR result by 100 to get an appropriate IRR. Is this
correct?
Thanks for anyone's assistance.

I think you may be confusing the display of the %

The IRR formula returns a number 76.89. This is formatted as a % and
hence shows as 7689%. (You'd probably normally expect %s to be much
lower than this so maybe the size of the number is causing confusion.
e.g. a % of 10% is entered in these formulae as 0.1)

If you plug the number 76.89 into the NPV formula you'll find that it
returns zero

HTH


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Richard Buttrey
Grappenhall, Cheshire, UK
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