CFI-Excel-eBook

The Corporate Finance Institute Excel
Use in financial modeling
XNPV is used routinely in financial modeling as a means of calculating the net
present value (NPV) of an investment opportunity.
For all types of financial models, XNPV and XIRR are highly recommended over
their date-less counterparts NPV and IRR.
While the added precision will have you feeling more confident about your
analysis, the only downside is that you have to pay careful attention to the
dates in your spreadsheet and make sure the start date always reflects what it
should.
For a transaction, like with a Leveraged Buyout (LBO) or an acquisition, it’s
important to be precise about the closing date of the deal. For example, you
may be building the model now, but the closing date will likely by several
months in the future.
To see the function in action, check out CFI’s financial modeling courses!
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