GLOSSARY

Excel for Corporate Finance Professionals

Michael McDonald

Use these terms and definitions below to understand concepts taught in the course.

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Term Definition
Compound annual growth rates. The rate of return needed for an
CAGRs
investment to grow from its starting balance to it ending balance
Internal rate of return. A test used to identify the profit rate of a particular
IRR test
project
Modified internal rate of return. A test that helps to address the limitations
MIRR test
of the simple IRR and NPV tests
Net present value. A test that can help you decide which investment
NVP test projects to take on based on whether or not a particular project is
profitable despite its risks
Payback period. A test that tells you how many months or years it will take
PBP test
until you re-earn your entire initial investment
Weighted average cost of capital. The rate a company is expected to pay
WACC
on average to all of its security holders to finance its assets

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