Verify Monthly IRR and NPV Using Excel or Google Spreadsheets XIRR and XNPV article
It is important to have confidence in your analysis, and it can be important to people viewing your analysis to have numbers confirmed. This article and video shows the IRR's and NPV's in planEASe verified against the XNPV and XIRR in Microsoft Excel and Google Spreadsheets.
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Video Title: Learn about the Verify Monthly IRR and NPV Using Excel or Google Spreadsheets XIRR and XNPV
Video Publication_Date: Tuesday, May 21, 2024
Video Duration: 8:30
Video Description:
The topic for this commercial real estate investment analysis video is Verify Monthly IRR and NPV Using Excel or Google Spreadsheets XIRR and XNPV. Throughout the video planEASe Software is used to illustrate Verify Monthly IRR and NPV Using Excel or Google Spreadsheets XIRR and XNPV. The video does not use the current Proforma Example, but all the factors that the Verify Monthly IRR and NPV Using Excel or Google Spreadsheets XIRR and XNPV are sensitive to are covered.
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In planEASe, all the IRR's and NPV's are computed on a monthly basis using the XIRR and XNPV process which is designed to handle irregular cash flows. To verify the planEASe IRR or NPV you need to use a spreadsheet program like Excel, Google Spreadsheets, Matlab, etc., because most financial calculators are not able to compute irregular dates and cash flows like the table shown below. The video above shows how to export these cash flows and dates to Excel and Google Spreadsheets and produce the same XIRR and XNPV.
Here are links to other descriptions of XIRR and XNPV:
IRR Verification ReportRetail - Office
These cash flows and dates are those on which the Rate of Return After Tax in the planEASe analysis of the Retail - Office are based.'
planEASe Software plans operating cash flows monthly, and assumes that cash flows occuring during the month all occur at the middle of the month.Calculators and Spreadsheets typically schedule these cash flows at the end of the year (year-end convention).Since cash flows do actually occur unevenly during the year, the mid-month convention is more accurate.
The Internal Rate of Return (IRR) is defined as the Present Value Discount Rate which makes the Net Present Value of the Cash Flows involved equal to zero. The Net Present Value of ($0.16) shown below demonstrates that the Net Present Value of these Cash Flows is very close to zero when discounted at 4.5752% and, in turn, the IRR of the Cash Flows is very close to 4.5752%.
Date
|
Years
|
Cash Flow
|
Present Value
Discount Factor
|
Present Value
at 4.5752%
|
| 1 Jan 2010 | 0.00 | ($1,023,344.00) | 1.0000000 | ($1,023,344.00) |
| 15 Jan 2010 | 0.04 | 1,691.00 | 0.9982856 | 1,688.10 |
| 15 Feb 2010 | 0.12 | 1,680.00 | 0.9944997 | 1,670.76 |
| 15 Mar 2010 | 0.20 | 1,669.00 | 0.9910926 | 1,654.13 |
| 15 Apr 2010 | 0.28 | 1,658.00 | 0.9873341 | 1,637.00 |
| 15 May 2010 | 0.37 | 1,647.00 | 0.9837104 | 1,620.17 |
| 15 Jun 2010 | 0.45 | 1,636.00 | 0.9799798 | 1,603.25 |
| 15 Jul 2010 | 0.53 | (11,578.00) | 0.9763831 | (11,304.56) |
| 15 Aug 2010 | 0.62 | 3,579.00 | 0.9726804 | 3,481.22 |
| 15 Sep 2010 | 0.70 | 3,568.00 | 0.9689916 | 3,457.36 |
| 15 Oct 2010 | 0.79 | 3,556.00 | 0.9654352 | 3,433.09 |
| 15 Nov 2010 | 0.87 | 3,545.00 | 0.9617740 | 3,409.49 |
| 15 Dec 2010 | 0.95 | 3,533.00 | 0.9582441 | 3,385.48 |
| 15 Jan 2011 | 1.04 | 3,796.00 | 0.9546101 | 3,623.70 |
| 15 Feb 2011 | 1.12 | 3,785.00 | 0.9509900 | 3,599.50 |
| 15 Mar 2011 | 1.20 | 3,773.00 | 0.9477319 | 3,575.79 |
| 15 Apr 2011 | 1.28 | 3,761.00 | 0.9441378 | 3,550.90 |
| 15 May 2011 | 1.37 | 3,749.00 | 0.9406726 | 3,526.58 |
| 15 Jun 2011 | 1.45 | 3,737.00 | 0.9371053 | 3,501.96 |
| 15 Jul 2011 | 1.53 | 3,772.00 | 0.9336659 | 3,521.79 |
| 15 Aug 2011 | 1.62 | 3,760.00 | 0.9301252 | 3,497.27 |
| 15 Sep 2011 | 1.70 | 3,748.00 | 0.9265978 | 3,472.89 |
| 15 Oct 2011 | 1.79 | 3,736.00 | 0.9231970 | 3,449.06 |
| 15 Nov 2011 | 1.87 | 2,001.00 | 0.9196960 | 1,840.31 |
| 15 Dec 2011 | 1.95 | 779.00 | 0.9163205 | 713.81 |
| 15 Jan 2012 | 2.04 | (3,586.00) | 0.9128455 | (3,273.46) |
| 15 Feb 2012 | 2.12 | (108,832.00) | 0.9093837 | (98,970.05) |
| 15 Mar 2012 | 2.20 | 3,454.00 | 0.9061572 | 3,129.87 |
| 15 Apr 2012 | 2.29 | 3,441.00 | 0.9027207 | 3,106.26 |
| 15 May 2012 | 2.37 | 3,428.00 | 0.8994076 | 3,083.17 |
| 15 Jun 2012 | 2.45 | 3,415.00 | 0.8959967 | 3,059.83 |
| 15 Jul 2012 | 2.54 | 3,548.00 | 0.8927082 | 3,167.33 |
| 15 Aug 2012 | 2.62 | 3,535.00 | 0.8893228 | 3,143.76 |
| 15 Sep 2012 | 2.71 | 3,522.00 | 0.8859502 | 3,120.32 |
| 15 Oct 2012 | 2.79 | 3,508.00 | 0.8826986 | 3,096.51 |
| 15 Nov 2012 | 2.87 | 3,495.00 | 0.8793511 | 3,073.33 |
| 15 Dec 2012 | 2.96 | 3,528.00 | 0.8761237 | 3,090.96 |
| 15 Jan 2013 | 3.04 | 3,670.00 | 0.8728012 | 3,203.18 |
| 15 Feb 2013 | 3.13 | 3,863.00 | 0.8694912 | 3,358.84 |
| 15 Mar 2013 | 3.20 | 3,850.00 | 0.8665124 | 3,336.07 |
| 15 Apr 2013 | 3.29 | 3,836.00 | 0.8632263 | 3,311.34 |
| 15 May 2013 | 3.37 | 3,822.00 | 0.8600581 | 3,287.14 |
| 15 Jun 2013 | 3.45 | 3,808.00 | 0.8567965 | 3,262.68 |
| 15 Jul 2013 | 3.54 | 763.00 | 0.8536519 | 651.34 |
| 15 Aug 2013 | 3.62 | (1,168.00) | 0.8504145 | (993.28) |
| 15 Sep 2013 | 3.71 | 3,720.00 | 0.8471895 | 3,151.54 |
| 15 Oct 2013 | 3.79 | 3,706.00 | 0.8440801 | 3,128.16 |
| 15 Nov 2013 | 3.87 | 3,691.00 | 0.8408791 | 3,103.68 |
| 15 Dec 2013 | 3.96 | 3,725.00 | 0.8377929 | 3,120.78 |
| 15 Jan 2014 | 4.04 | 3,724.00 | 0.8346157 | 3,108.11 |
| 15 Feb 2014 | 4.13 | 3,922.00 | 0.8314506 | 3,260.95 |
| 15 Mar 2014 | 4.20 | 3,907.00 | 0.8286021 | 3,237.35 |
| 15 Apr 2014 | 4.29 | 3,892.00 | 0.8254598 | 3,212.69 |
| 15 May 2014 | 4.37 | 3,877.00 | 0.8224302 | 3,188.56 |
| 15 Jun 2014 | 4.45 | 3,862.00 | 0.8193113 | 3,164.18 |
| 15 Jul 2014 | 4.54 | 3,846.00 | 0.8163042 | 3,139.51 |
| 15 Aug 2014 | 4.62 | 3,905.00 | 0.8132085 | 3,175.58 |
| 15 Sep 2014 | 4.71 | 3,889.00 | 0.8101246 | 3,150.57 |
| 15 Oct 2014 | 4.79 | 3,874.00 | 0.8071513 | 3,126.90 |
| 15 Nov 2014 | 4.87 | 3,858.00 | 0.8040903 | 3,102.18 |
| 15 Dec 2014 | 4.96 | 1,833.00 | 0.8011391 | 1,468.49 |
| 15 Jan 2015 | 5.04 | (6,170.00) | 0.7981009 | (4,924.28) |
| 15 Feb 2015 | 5.13 | (2,559.00) | 0.7950743 | (2,034.60) |
| 15 Mar 2015 | 5.20 | (2,575.00) | 0.7923504 | (2,040.30) |
| 15 Apr 2015 | 5.29 | (2,592.00) | 0.7893456 | (2,045.98) |
| 15 May 2015 | 5.37 | (78,787.00) | 0.7864485 | (61,961.92) |
| 15 Jun 2015 | 5.45 | 5,014.00 | 0.7834660 | 3,928.30 |
| 15 Jul 2015 | 5.54 | 4,998.00 | 0.7805906 | 3,901.39 |
| 15 Aug 2015 | 5.62 | 5,057.00 | 0.7776303 | 3,932.48 |
| 15 Sep 2015 | 5.71 | 5,041.00 | 0.7746813 | 3,905.17 |
| 15 Oct 2015 | 5.79 | 5,024.00 | 0.7718381 | 3,877.71 |
| 15 Nov 2015 | 5.87 | 5,007.00 | 0.7689110 | 3,849.94 |
| 15 Dec 2015 | 5.96 | 4,989.00 | 0.7660889 | 3,822.02 |
| 31 Dec 2015 | 6.00 | 1,332,012.00 | 0.7645881 | 1,018,440.49 |
| TOTALS | | $311,827.00 | | ($0.16) |
Written by
Michael Feakins, CCIM
of planEASe Software