Chapter 11 — Capital Budgeting

NPV, IRR, MIRR, Payback, Discounted Payback, Profitability Index (PI).

FIN435 • Spring 2026 Theme

Links

Chapter 11 PPT Capital Budgeting Calculator (jufinance.com/capital) Excel Template

Disclaimer: Materials are provided for educational use on jufinance.com.

Excel syntax (copy/paste)

1) NPV Syntax: NPV(rate, value1, value2, ...) - rate: discount rate per period - values must be equally spaced and occur at the end of each period Example: =NPV(11%, 350, 350, 350) - 800 2) IRR Syntax: IRR(values, guess) - values: range of cash flows (must include at least one negative and one positive) - guess: optional starting value Example: =IRR(A1:A4) 3) PI (Profitability Index) PI = NPV / CF0 + 1 PI = 1 + NPV / ABS(CF0) 4) MIRR Syntax: MIRR(values, finance_rate, reinvest_rate) - values: range of cash flows - finance_rate: rate paid on negative cash flows (borrowing) - reinvest_rate: rate earned on reinvested positive cash flows Example: =MIRR(A1:A6, 8%, 8%)

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