IRR and MIRR CBE calculation — OpenTuition Forums

Rrr91254y ago

Hi John, Good Afternoon, In our CBE platform we can use the short cut method (as in use inbuilt formula) to calculate IRR and MIRR. However, what i have noticed is that the numbers estimated by CBEs are different to the numbers calculated manually. Although the numbers are not too different, but i am just wondering if it is still okay for us to calculate using these CBE inbuilt links at all? Please could you confirm? Also, for that matter, is it okay to calculate NPV too using these inbuilt formulae despite the outcome being slight different again? Thank you for your help. Kind regards, Rai

John MoffatTutor4y ago#1

You can use the spreadsheet functions (and you are better to do so because it saves a lot of time). The answers are slightly different because the tables are rounded to three decimal places when doing it manually and using 2 guesses to calculate the IRR only ever gives an approximation - in both cases using the spreadsheet functions is more accurate. (However whichever way you do it, as in all of AFM it is not the final answer that gets the marks - the marks are for the workings. It doesn't matter which was you do it.)