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Multiple Internal Rates of Return: Discount Rate 6% NPV
Multiple Internal Rates of Return: Discount Rate 6% NPV
Discount rate 6%
NPV DATA TABLE
Discount
rate NPV
Year Cash flow
0 -145 0%
1 100 3%
2 100 6%
3 100 9%
4 100 12%
5 -275 15%
18%
Identifying the two IRRs 21%
First IRR 24%
Second IRR 27%
30%
33%
36%
39%
TURN
MULTIPLE COMPOUNDING PERIODS
Initial deposit 1,000
Interest rate 5%
Number of compounding periods per year 2
Interest per compounding period
Accretion in one year
Continuous compounding with Exp
End-year
Compounding periods per year
accretion
1
2
10
20
50
100
150
300
800
CALCULATING RETURNS FROM PRICES
Initial deposit 1,000
End-of-year value 1,200
Number of compounding periods 2
Implied annual interest rate
Continuous return
1
2
4
8
20
1000
USING XIRR TO COMPUTE THE
ANNUALIZED INTERNAL RATE OF
RETURN
Date Cash flow
1-Jan-06 -1,000
3-Mar-06 150
4-Jul-06 100
12-Oct-06 50
25-Dec-06 1,000
IRR
USING XNPV TO COMPUTE THE NET
PRESENT VALUE
Annual discount rate 12%
Average
Sample variance
Population variance
Sample standard deviation
Population standard deviation
Correlation
Covariance
Regression intercept
Regression slope
Regression r-squared
USING LINEST TO DO A MULTIPLE REGRESSION
Observation X1 X2 Y Predicted Y
1 35.3 81.2 10.98
2 29.7 22.5 11.13
3 30.8 77.3 12.51
4 58.8 34.8 8.4
5 61.4 55.1 9.27
6 71.3 124.8 8.73
7 74.4 18.5 6.36
8 76.7 234.6 8.5
9 70.7 22.5 7.82
10 57.5 123.3 9.14
Ranking, k 3
K-th largest
Cutoff 5%
Returns over cutoff
Merck
Date price Return
3-Jan-06 31.82
9-Jan-06 32.15
17-Jan-06 31.94
23-Jan-06 33.33
30-Jan-06 33.04
6-Feb-06 32.96
13-Feb-06 34.63
21-Feb-06 33.72
27-Feb-06 33.81
6-Mar-06 33.76
13-Mar-06 34.61
20-Mar-06 35.01
27-Mar-06 34.22
3-Apr-06 33.48
10-Apr-06 32.96
17-Apr-06 33.74
24-Apr-06 33.43
1-May-06 33.49
8-May-06 33.3
15-May-06 33.43
22-May-06 33.57
30-May-06 33.36
5-Jun-06 33.22
12-Jun-06 33.81
19-Jun-06 34.33
26-Jun-06 35.79
3-Jul-06 36.32
10-Jul-06 35.52
17-Jul-06 36.71
24-Jul-06 40.4
31-Jul-06 40.63
7-Aug-06 39.89
14-Aug-06 38.83
21-Aug-06 39.73
28-Aug-06 40.62
5-Sep-06 40.72
11-Sep-06 40.76
18-Sep-06 41.69
25-Sep-06 41.55
2-Oct-06 41.51
9-Oct-06 42.84
16-Oct-06 45.26
23-Oct-06 45.7
30-Oct-06 44.72
6-Nov-06 42.76
13-Nov-06 44.68
20-Nov-06 43.81
27-Nov-06 44.68
4-Dec-06 43.93
11-Dec-06 44
18-Dec-06 42.83
26-Dec-06 43.6
3-Jan-07 44.3
BASIC BOOLEAN
FUNCTIONS
x 22
y -15
Number 25
Is number <= x?
Is number > y?
Multiplying
Number 20
Is number <= x?
Is number > y?
Multiplying
USING BOOLEAN FUNCTIONS
Marriott
Date stock Return
price
7-Jan-05 31.2 How many data points?
1-Feb-05 31.65 Maximal return
1-Mar-05 33.06 Minimal return
1-Apr-05 31.03
2-May-05 33.4
1-Jun-05 33.78 Upper bound 5%
1-Jul-05 33.91 Lower bound -2%
1-Aug-05 31.3
1-Sep-05 31.25 How many < upper bound?
3-Oct-05 29.58 How many > lower bound?
1-Nov-05 32.05