IRR with semi-annual cash flow
Have a look at exercise 8 in the spreadsheet. In cell B126, using the Excel formula, calculate IRR. What is the result?
Compared against cell B117, the formula is giving us the wrong result because the cash flows in this instance are semi-annual. One solution is to set up a table just as in exercise 8. Notice how the discount factors have been altered in line 119 and then 121.
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There is another solution though, which involves making use of Excel’s XIRR formula. More on that next: advanced financial modelling course.
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