While IRR is a more complex calculation, we can understand its usefulness with a simple example. Imagine a big business ...

Be sure the cell range in the IRR formula always starts with the lump-sum cell in Column C and ends with the age you want. For example, =IRR(C1:C18) would be the formula used at age 80 in Column D.

Take our NPV/IRR example. We’ve calculated an NPV of $472,169 with an IRR of 57% using a hypothetical outlay, our WACC risk-free rate, and expected after-tax cash flows. We’ve already defined ...