http://en-us.thinkanddone.com/
Using this NPV calculator
http://en-us.thinkanddone.com/tadNPV.exe
NPV = 5100.81
Using this IRR calculator
http://en-us.thinkanddone.com/tadIRR.exe
IRR = 9.79%
Manually finding NPV using this tool
http://en-us.thinkanddone.com/online-npv...
DCF1 = ### -62000 x (1+8%)-0 ### -62000 x 1.00000 ### -62,000.00
DCF2 = ### 10000 x (1+8%)-1 ### 10000 x 0.92593 ### 9,259.26
DCF3 = ### 10000 x (1+8%)-2 ### 10000 x 0.85734 ### 8,573.39
DCF4 = ### 10000 x (1+8%)-3 ### 10000 x 0.79383 ### 7,938.32
DCF5 = ### 10000 x (1+8%)-4 ### 10000 x 0.73503 ### 7,350.30
DCF6 = ### 10000 x (1+8%)-5 ### 10000 x 0.68058 ### 6,805.83
DCF7 = ### 10000 x (1+8%)-6 ### 10000 x 0.63017 ### 6,301.70
DCF8 = ### 10000 x (1+8%)-7 ### 10000 x 0.58349 ### 5,834.90
DCF9 = ### 10000 x (1+8%)-8 ### 10000 x 0.54027 ### 5,402.69
DCF10 = ### 10000 x (1+8%)-9 ### 10000 x 0.50025 ### 5,002.49
DCF11 = ### 10000 x (1+8%)-10 ### 10000 x 0.46319 ### 4,631.93
NPV (Annuity Due) T= 0 to N-1 ### 5,100.81
Manually finding IRR using this tool
http://en-us.thinkanddone.com/online-irr...
f(r) = -62000(1+r)^0 +10000(1+r)^-1 +10000(1+r)^-2 +10000(1+r)^-3 +10000(1+r)^-4 +10000(1+r)^-5 +10000(1+r)^-6 +10000(1+r)^-7 +10000(1+r)^-8 +10000(1+r)^-9 +10000(1+r)^-10
f'(r) = -10000(1+r)^-2 -20000(1+r)^-3 -30000(1+r)^-4 -40000(1+r)^-5 -50000(1+r)^-6 -60000(1+r)^-7 -70000(1+r)^-8 -80000(1+r)^-9 -90000(1+r)^-10 -100000(1+r)^-11
r0 = 0.1
f(r0) = -554.3289
f'(r0) = -263962.8111
r1 = 0.1 - -554.3289/-263962.8111 = 0.097899973330841
Error Bound = 0.097899973330841 - 0.1 = 0.0021 > 0.000001
r1 = 0.097899973330841
f(r1) = 3.9357
f'(r1) = -267722.2164
r2 = 0.097899973330841 - 3.9357/-267722.2164 = 0.097914674139569
Error Bound = 0.097914674139569 - 0.097899973330841 = 1.5E-5 > 0.000001
r2 = 0.097914674139569
f(r2) = 0.0002
f'(r2) = -267695.6664
r3 = 0.097914674139569 - 0.0002/-267695.6664 = 0.097914674868595
Error Bound = 0.097914674868595 - 0.097914674139569 = 0 < 0.000001
IRR = r3 = 0.097914674868595 or 9.79%
No, something went wrong with your NPV calculation. At a 10% required rate of return (RRR) and $10,000 annual net cashflows for 10 years, the NPV is only -$554. But at a RRR of 8%, the NPV is actually +$5,101. Here is an online financial calculator and cash flow chart to prove it:
http://www.calculatorsoup.com/calculator...
The IRR is the point where the NPV is zero. Based on the above problem specifications the IRR is 9.79%. Oh yes, to answer your other question, if at a certain RRR the NPV is negative, that only means that the IRR is less than the RRR.
Here is another IRR/NPV calculator, if you only have up to 6 irregular cash flows:
http://www.datadynamica.com/irr.asp
Net investment 62,000
Useful life 10 years
Annual cash inflow 28,000
Annual cash outflow 18,000
RRR 8%
I have an NPV of approx -129100
I can't find the IRR, NPV does not become 0 if I choose a 10% rate.
