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Excel for Finance
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May 18, 2021
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We are undertaking a project where ALL the resulting cashflows are negative. We are undertaking the project as an operational investment, understanding that it will be a cost of doing business. HOWEVER, because all the numbers are negative, I am getting a #NUM! response. We still want to know the IRR, even if negative. Can you help? Here are the numbers:
2022 -761,198
2023 -604,215
2024 -642,156
2025 -678,380
2026 -719,923
2027 -759,800
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Excel for Finance
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May 18, 2021
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I believe I may have come up with a solution for my particular issue, but I'd appreciate opinions as to whether my logic is correct.
In order to get the formula to work,
(1) I took the total investments (expenses), and put the entire negative balance as the investment amount (should I have used NPV?).
(2) we are realizing some savings over the years of the project, so they are in their respective years -- the total expenses for the years is the same, and NOW the formula works with the following inputs:
2022 -8,138,740
2023 719,224
2024 755,039
2025 792,686
2026 832,260
2027 873,858
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