The payback period is the time it takes for a project to recover the investment cost. For example, if you invest $100 and the returns are $50 per year, you will recover your initial investment in two years.
How to use Excel VLOOKUP
The NPV formula in Excel is counterintuitive at first. When I first used it, I made a simple mistake by selecting all the cash flow, including the initial investment. I learned that Excel requires you to select only the future flows and then discount the initial investment from the result, to get the accurate NPV value.
This article teaches you how to calculate the IRR (Internal Return Rate) using Excel. The Excel function to calculate the IRR is “IRR” and it’s really simple, since it only takes the range that contains the flow of funds, including the initial investment.
The cash flow statement shows the inflows and outflows of cash generated and used by an organization in a given period of time.