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(In Excel 2007, at least.) That is because of the internal default convergence tolerance for the operation.
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If you use Goal Seek as-is, F2 might be 15.02% instead of 15.00%. But they could be avoided.Īlternatively, you can use Set Cell F2 and To Value 15%, and F3 is not needed for the solution. The formula in F10 is not needed for the solution.įor Goal Seek, I use F3 to make the set-up more flexible. Unfortunately, Goal Seek and Solver do not work well if F1 is empty, unless we modify some other formulas as well. However, if prefer to use Goal Seek or Solver, it is very straight-forward, With those formulas, F2 and F3 are not needed for the solution. F1 depends on the formula in F10, which calculates the required NPV of CF0:CF2. In that case, the formula in F1 calculates the total outlay such that the distribution of the costs in C2:C4 are needed in order to achieve the IRR in B1. In your original example, B2:B4 might be construed as percentages of the total outlay of -26,269.34. You enter your goals.į6:F8 and G6:G8 are provided as double-checks. If you do not want to enter any 2 of CF0, CF1 and CF2, you need to specify a relationship among them.įor example, suppose you want their values to decline at a rate of 10%, specified in E2.ī1 and C2:C4 are data entry. Another way, which I use above, is NPV(B1,CF0:CFn)*(1+B1). So to calculate NPV as we expect, one way is to use the formula CF0+NPV(B1,CF1:CFn). And we expect that NPV(B1,CF0:CFn) calculates the NPV to time 0. Like you, normally we label the first CF and "present time" as CF0. With the insufficient information that you provided, the best we can do is calculate the NPV of CF0, CF1 and CF2, as demonstrated in E1.īut if you provide any 2 of CF0, CF1 and CF2 in F2:F4, the formulas in E2:E4 derive the remaining CF.Ī word about Excel NPV. The formulas in E6:E7 are provided as "proof of concept". The formula in B1 is provided as "proof of concept". Normally, the formulas in E2:E4 would be in B2:B4.