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Demystifying the NPV and IRR

Net Present Value (NPV) and Internal Rate of Return (IRR) are the two most common metrics used in measuring and comparing the profitability of projects and investments. They are almost always calculated when building a financial model. Although almost every finance professional learns about these two methods in their undergraduate studies, in practice many forget the basics when using them in practice. This may lead to red faces and teary eyes when projects don’t go to plan.

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VBA for scenario analysis in project finance modelling

A common way of running scenario analysis in financial models is by using Excel’s in-built data table function (see tutorial Excel data tables). However, this becomes a challenge when the model contains macros that need to be run for every input change.

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Avoiding circular references when modelling debt service reserve accounts (DSRA) with sculpted principal repayments

I generally don’t post the many questions that I respond to directly from readers; however, this will provide some useful insight into something that causes so many model builders, auditors and managers sleepless nights. There is no rocket science (sorry!) just a healthy dose of experience and practicality.

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Debt repayment modelling – multiple methods

Financiers are often required to analyse multiple debt repayment methods in a project finance transaction. This process is particularly important in the structuring or credit approval process. This tutorial demonstrates step-by-step techniques on how to dynamically build such optionality into your financial model.

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Excel IRR Function and other ways to calculate IRR in Excel

The internal rate of return (IRR) is a common source of error in a financial model. This tutorial covers how to calculate an IRR in Excel, and assumes that the reader is already familiar with the mathematical concept of the IRR.

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