From the course: Investment Evaluation

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Solution 6: Choose a project based on NPV, IRR, and payback period

Solution 6: Choose a project based on NPV, IRR, and payback period - Microsoft Excel Tutorial

From the course: Investment Evaluation

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Solution 6: Choose a project based on NPV, IRR, and payback period

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- [Instructor] We're on our very last challenge of the course, and this is kind of the culminating project, if you will. And if you just want the fully workpad exercise file you can take a look at 04_12_Solution6 from the exercise files. And this is just so much fun. Let's take a look at these two projects. We have two projects to choose from, and we're gonna see if these are both acceptable projects on their own, and which one we would pick if we had to choose one or the other. So I've shown you the net cash flow, I've shown you the net cash flow in project two here, and I've shown you the net sum. Notice how the net sum. At the end of the day if you look at the bottom line after seven years your net sum is the exact same. But I'm gonna show you that these projects themselves are not the same. So let's calculate the NPV, IRR, Payback Period individually for each project. You already know how to do NPV, so in cell F6 equals NPV open parenthesis, my rate is 6% and my values are from B5…

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