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Software Introduction
Topic for the assignment relating to subject Introduction to Business finance
is “Find any computer program to calculate NPV and IRR and also learn to
use it.” So the topic asks about any sort of software which is made for
calculating NPV and IRR. There are so many software made for calculating
NPV and IRR, we can also calculate NPV and IRR by using the interface of
MS-EXCEL, but other software provide us greater ease and supportability
for using formulas.
So the Software, I have used for Calculating Net Present Value (NPV) and
Internal Rate of Return (IRR) is “SolveIT!, The financial Calculator”. The
Graphical User Interface for the software can be seen in figure shown below.
Solve!IT, The Financial Calculator

There are six categories in this software, which are:

1. Financial calculators
2. Depreciation calculators
3. Loan calculators
4. Schedules – Cash Flows
5. General calculators
6. Advisors
These are briefly described one by one:
1. Financial calculators
It includes some of the basic finance formulas which are Compound &
Simple Interest Calculator, Return on Investment Calculator, Equivalent
Rate Calculator, Internal Rate of Return Calculator (IRR), Net Present
Value Calculator(NPV), Payment Required Calculator, and Present Value
of an Amount Calculator.
2. Depreciation calculators
It includes formulas relating to depreciation. These are Declining Balance
Depreciation Calculator, MACRS Calculator, Straight Line Depreciation
Calculator, and Sum of Years Depreciation Calculator.
3. Loan calculators
It includes formulas relating to Loan calculation. These are Accelerated
Payment Calculator, Affordable House, Balloon Payment Calculator, Bridge
Loan Calculator, Loan Calculator, Remaining Balance Calculator.
4. Schedules – Cash Flows
It includes formulas relating to Schedules – Cash Flows calculation. These
are Annuity Schedule, Future Value (FV) Schedule, Present Value (PV) of a
Series Schedule, Rental Analysis Schedule, and Flexible Amortization
Schedule.
5. General Calculators
It includes formulas relating to General calculation. These are Bond
Calculator, Budget Calculator, Economic Ordering Quantity Calculator,
Gross Profit Calculator, Net worth Calculator, Purchasing Power Calculator,
and Weighted Average Calculator.
6. Advisors
It includes formulas relating to calculations which are necessary for
Advisors and through these formulas Advisors take decisions. These are
Break Even Advisor, Lease vs Buy Advisor, Loan Comparison Advisor, and
Refinance Advisor.

Calculating Net Present Value (NPV)

One method of evaluating the feasibility of a capital expenditure decision is
to use the Net Present Value (NPV) method of evaluation. The present value
of the cash flows (both positive and negative values can be entered) are
determined using the MINIMUM rate of return (Discount Rate) on an
investment that you will accept. The calculated result, if positive, tells you
that you are exceeding your minimum requirements and a negative value
tells you that you are not achieving your objective.
 Enter the initial amount. Since it is assumed that this will be the initial
investment which is a cash outflow, it should be entered as a negative value.
Enter the Total Periods and Initial Date and set the payment frequency
(Payment Period).
The cash flow input fields will be updated or created according to the inputs
you enter. Enter each projected cash flow.
Usage Note: When entering cash flows, the arrow keys will move the cell
pointer from cell to cell. Additionally, if the menu choice {Preferences}{Tab
key moves cell to cell in grid...} is checked, then [Tab] will move the cell
pointer left to right and [Shift][Tab] will move it from right to left.
Otherwise, if it is not checked, [Tab] will move the focus to the next control
i.e. the 'Calc' button.
Solved Problem from Final Paper of B.Com (H) P-III
XYZ firm is planning to invest in manufacturing plant that costs purchase a
new manufacturing plan that costs Rs.777000/- and its future cash flow is
Rs.103300/- for year one, Rs.198400/- for year two, Rs.238000/- for year
three, Rs.263000/- for year four and Rs.296000/- for year five. Evaluate the
investment proposal by applying, NPV and IRR methods of capital
budgeting when the interest rate is 8%, required payback period is 5 year
and RRR is 10%?
The problem is solved in Figure:
The Solved Figures of problem are:
Net Present Value Calculator
Initial Amount?: (Rs.777,000.00)
Discount Rate? (%): 8.000
Total Periods? (#): 5
Initial Date?: 05/29/09
Payment Period?: Annually

05/29/10 Rs 103,300.00
05/29/11 Rs 198,400.00
05/29/12 Rs 238,000.00
05/29/13 Rs 263,000.00
05/29/14 Rs 296,000.00

Net Present Value: Rs 72,318.66

Total Invested (-outflows): (Rs 777,000.00)
Total Return (+inflows): Rs 1,098,700.00
Net Cash Flow: Rs 321,700.00

Calculating Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) will take you to the bottom line of an
investment. It tells you the annualized rate of return on a complicated series
of cash flows. Measure this against what you can earn in a risk-free
investment to determine the desirability of this investment.
In technical terms, IRR is the discount rate that sets all cash inflow and
outflow to 0. More weight is given to the earlier cash flow than to the later
cash flow because of the time value of money.
Usage Note: When entering cash flows, the arrow keys will move the cell
pointer from cell to cell. Additionally, if the menu choice {Preferences} is
checked, then [Tab] will move the cell pointer left to right and [Shift][Tab]
will move it from right to left. Otherwise, if it is not checked,
Solved Problem from Final Paper of B.Com (H) P-III
XYZ firm is planning to invest in manufacturing plant that costs purchase a
new manufacturing plan that costs Rs.777000/- and its future cash flow is
Rs.103300/- for year one, Rs.198400/- for year two, Rs.238000/- for year
three, Rs.263000/- for year four and Rs.296000/- for year five. Evaluate the
investment proposal by applying, NPV and IRR methods of capital
budgeting when the interest rate is 8%, required payback period is 5 year
and RRR is 10%?

The problem is solved in Figure:

Internal Rate of Return Calculator

Initial Investment?: (Rs.777,000.00)

Total Periods? (#): 5
Initial Investment Date?: 05/29/2009
Periodic Cash Flow?: Annually
Estimated IRR (guess)?: 10.00

05/29/2010 Rs.103300.00
05/29/2011 Rs.198400.00
05/29/2012 Rs.238000.00
05/29/2013 Rs.263000.00
05/29/2014 Rs.296000.00

Internal Rate of Return (IRR) (%): 10.9940

Total Invested (-outflows): (Rs.777, 000.00)
Total Return (+inflows): Rs.1,098,700.00
Net Cash Flow Over 5 Years: Rs.321,700.00