From the course: Excel for Corporate Finance Professionals
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Identify the valuation - Microsoft Excel Tutorial
From the course: Excel for Corporate Finance Professionals
Identify the valuation
- [Instructor] Once we've set up our model, we still need to go through and actually decide whether or not a particular investment is worthwhile. And this requires us to value that investment. I'm in the 05_04_Begin Excel file. Now we've talked about IRR and NPV previously. Let's see how we would apply this in this type of scenario where we have this coffee robot and we can make a buy or lease decision. Now it's a value of one if we want to buy, meaning true, and it's a value of zero otherwise, and we could hard code this of course, so that it was true or false, and try to tie that to the one or zero but it really gives us the same result as we had otherwise. So there's not really any added value to doing that. Now to figure out our IRR, we can simply use the irr function, and we'll look at the difference between the robotic equipment versus the human equipment so notice that's where we've got this difference line coming…
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