So in the last lecture, we have discussed that how you can calculate IRR using a simple or your formula
and that was as simple as equals, Iren and give all the cash flows control.
Enter and here you go.
So Nicolelis simple, right?
And you don't have to calculate any net present value to calculate IRR.
And by the way, this answer that comes by this Excel formula is the best estimate of the IRR.
Now, the problem is that just like the NPV this year formula will not consider the time of the cash
flows.
So this formula assumes that cash flows that are given are in a specific form and that is your zero
one, two, three, four, five onwards.
And in reality, the cash flows can be different from that can be different.
So what we need to do is to act rather if there are different dates and cash flows are not entirely
from what we can do instead of IRR is to use our formula in this formula.
This formula will be asking you values that are here, as well as the next argument that this formula
is asking you are.
So if I can go to the dates and select all the dates and I can control enter excluded, give me the
same in this case, the same estimate of IRR.
The reason is that the dates that have chosen here are the same as the year year zero.
One, two, three, four, but not if let us through the cash flows changes and this cash flow that
is here basically comes rather than this after a year, if this cash flows come after six months one
and it is six months or whatever it is, I press enter and you will see that the estimate of the zero
will change year.
So basically X IRR will not only look at the values, it will also be looking at the time of the cash
flows.
So that is another very powerful tool if you are working with Thornberrys and.