may be additional positive or negative answers, or no true solution at all. You can continue searching for other solutions by halting the calculation and entering a different guess.
One way to obtain a good guess for IRR% is to calculate NPV for various interest rates (I%). Since IRR% is the interest rate at which NPV equals zero, the best estimate of IRR% is the interest rate that yields the value for NPV closest to zero.
To find a good estimate for IRR%, key in a guess for IRR% and press Then, press to calculate NPV for that value. Repeat the calculation of NPV for several values of I%, and look for trends in the results. Choose as your guess for IRR% a value of I% that produces an NPV close to zero.
Solver Calculations
As noted in chapter12, the Solver uses two methods to find solutions, depending on the complexity of the equation: direct and iterative (an indirect). To use all the calculating power included in the Solver, it would help to understand, in a general way, how it works.
Direct Solutions
When you start a calculation (by pressing a menu key), the Solver first tries to find a direct solution by “isolating” the variable you are solving for (the unknown). Isolating a variable involves rearranging the equation so that the unknown variable is by itself on the
P R O F I T = P R I C E － C O S T
If you’ve stored values for PROFIT and PRICE, pressing causes the Solver to internally rearrange the equation algebraically to solve for COST (COST is the unknown):
C O S T = P R I C E － P R O F I T
Answers calculated this way are called direct solutions.
240 B: More About Calculations
File name :