88 Appendix — Reference Information
Net present value depends on the values of the initial cash flow (CF
0
),
subsequent cash flows (CF
j
), frequency of each cash flow (n
j
), and the
specified interest rate (
i).
where: i is the periodic interest rate used in the calculation of NPV.
where: is the frequency of the k
th
cash flow.
IRR = 100 × i, where i satisfies npv() = 0
Internal rate of return depends on the values of the initial cash flow
(
CF
0
) and the subsequent cash flows (CF
j
).
i = I/Y ÷ 100
The calculator uses this formula to compute the modified internal rate of
return:
where: positive = positive values in the cash flows
negative = negative values in the cash flows
N = number of cash flows
rrate = reinvestment rate
frate = finance rate
NPV (values, rate) = Net present value of the values in the rate
described
NFV 1 i+()
p
NPV×=
n
k
k 1=
N
∑
=
n
k
MOD
NPV (positive, rrate–
NPV (negative, frate)
-----------------------------------------------------
1 N⁄
1 rrate+()1–×=
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