# Calculation of NPV and IRR Assignment Help

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## Calculation of NPV and IRR Assignment Help Online

IRR is also referred to as Internal Rate of Return which is aimed at calculating the overall profitability of investments that goes in financial product or projects. It can be defined simply by taking an example, where a person invests a specific amount in the ULIPs, mutual funds, debenture etc. that come back to him in with interest post the completion of specific time period of 5, 10, 15 or 25 years. When the investment matures the money to be received on the day needs to be calculated the exact amount of gain. This process is not as simple as it sounds. So, writing service related to Calculation of NPV and IRR assignment help is needed for these basic calculations.

Calculation can be done simply by entering the original amount that was invested in the financial instrument. While calculating this in excel, amount must be entered with a ‘minus’ sign. Followed by this, each column must be filled with amount received each year. Basically, the calculation has to follow the certain rules wherein all the amount invested is presented by the minus sign whereas cash that flows in must have a positive sign. These flows are indicated and printed at different intervals as and when they are expected to come during the netire tenure of investment.

## Important Rules for Calculating IRR

• All the values added in the excel must have either a positive and negative sign as per the indication
• Amount received at the end of the entire calculation is amount of IRR. It is important to note that this amount will always be in positive since negative will indicate a loss, which can never be the case in such calculation. So, 1000 will be presented as +1000
• Amount invested is presented as negative value and is indicates with a minus signs. For example, Rs.100 invested will be shown as -100.
• All the amount investments must be shown as regular intervals. For example: amount invested each year must be given on 1st of the financial year.
• The calculation is done with the assumption that all payments are made annually.

The primary purpose of calculating IRR is to showcase the profitability of investments that go in a project or any financial instrument. As a simple rule stated in assignment writing help on Calculation of NPV and IRR , Higher the IRR, a business is recognised as more profitable and vice versa. However, it is important that investors realise the risk of loss before making an investment.

### Explaining the Concept of NPV

NPV is the basic concept that extends to the calculation and admittance of IRR. Simply put, IRR cannot be explained without understanding how NP works. An investor before making any investment must evaluate the present value of cash before assessing its inflated cost after a certain time period for which it will be invested. So, the present worth of cash valued before investing is considered as Net Present Value (NPV).

Formula for NPV = cash flow / discount rate + 1^N (n stands for number of years / duration of the investment)

Let’s take an example wherein a project assures the investors 8% IRR (also known as discount rate) for 5 years. By using this formula, one can evaluate the present value of investment along with what it brings back post a certain time period. As basic rule, NPV must always be above zero.

As discussed above, Net Present Value (NPV) calculates the current value of a cash flows that are done in a series at equivalent time intervals. This is indicated as NPV (rate, value1, value2, so on…) important to consider is the fact that even though this process is called Net Present Value (NPV), it often fails to calculate the net present value if a project or financial product. Calculation of NPV and IRR essay assignment help explains the reason for this since initial investment done at time 0 is not considered in the entire calculation. This gap can be filled by subtracting initial investment from the result to get the accurate NPV.

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