Chirayuthchai TraisaengsatheanStrategic Finance for Property Development
THEN

Project IRR and NPV

Enter annual or monthly cash flows to calculate Project IRR, NPV, MOIC and payback

Related reading Real Estate Project Strategic Financial Management Handbook: A Practical Guide · Part 2
The figures entered are hypothetical examples. Every field can be edited. Units are in THB million.

1

Model settings

Select the frequency, start period and discount rate

Cash flow frequency
The first period is the starting point (period 0) and is not discounted
Used to label the periods in the table
% per year. Used to calculate NPV and as the benchmark for comparing IRR
2

Enter cash flow by period

Enter cash outflows and inflows as positive numbers. The tool calculates the net figure.

Cash flow entry table
PeriodPeriodOutflowsInflowsNetDelete
Paste data from Excel or type a series of numbers
3

Project evaluation results

Recalculated every time a figure is changed

Project IRR per year––
NPV––
MOIC–Net cash received ÷ net investment
Payback––
  • Peak cumulative investment–
  • Net profit before discounting–
  • IRR per period–
  • Profitability Index–
  • Discount rate per period–
Chart of net cash flow by period and cumulative balance (J-curve)
  • Net outflow
  • Net inflow
  • Cumulative
  • Cumulative discounted
  • Payback point
4

Cash flow table by period

THB million · negative values shown in red

Cash flow by period, discounting and cumulative balance (THB million)
PeriodCash flowDiscountingCumulativeEvent
#PeriodOutflowsInflowsNetDiscount FactorPresent valueCumulativeCumulative discounted

Row underlinePoint of peak cumulative investmentPeriod in which the cumulative balance turns positive (payback)

5

NPV and IRR sensitivity

Change the discount rate and revenue at the same time

NPV (THB million) by discount rate × change in cash inflows

The cell with the gold border is the base case. The last row shows the annual Project IRR when cash inflows change as shown in the column headers; it does not depend on the discount rate.

Results are calculations for learning purposes only. The figures entered are hypothetical examples, not real project data, and are not investment advice.

How to use

  1. Choose annual or monthly frequency and the start year and month, then enter the discount rate as % per year.
  2. Enter each period's cash outflows and inflows as positive numbers, starting from period 0. You can add periods 1 or 12 at a time, or paste data from Excel.
  3. Always read IRR together with NPV. Check peak cumulative investment to see how much funding the project needs, and use the sensitivity table to see how well returns withstand lower revenue.

Assumptions and limitations

  • Cash flows are treated as a single lump sum at the end of each period. Period 0 is not discounted. Discount factor = 1 ÷ (1 + rate per period)period
  • For monthly data, annual IRR = (1 + monthly IRR)12 − 1 and the monthly discount rate = (1 + annual rate)1/12 − 1
  • MOIC = sum of positive net cash flows ÷ sum of negative net cash flows. Profitability Index = 1 + NPV ÷ present value of the negative periods.
  • Payback uses the last point at which the cumulative balance turns positive, with linear interpolation within that period. Discounted payback uses the cumulative discounted balance in the same way.
  • If the cash flow changes sign more than once, there may be more than one IRR. This page shows the value closest to the discount rate and displays a warning. Base the decision on NPV.
  • This is cash flow before financing. To see the effect of debt, use the Equity IRR tool.
The results are only an illustrative calculation. Their accuracy depends on the assumptions entered by the user. Check them against the project's financial model before using them to make decisions.

Tools to use together