DI: Estimation of IRR and Monte Carlo Simulation of NPV by Excel

Most of the DCF (Discounted Cash Flow) model is based on a deterministic assumption that all growth rates and discount rates are known apriori, by means of this deterministic DCF model, we can then estimate the Internal Rate of Return (IRR), i.e. the discount rate such that Net Present Value, NPV = 0.

1. Deterministic DCF Model and Estimation of IRR

(If you are familiar with this deterministic DCF model, you may skip this section and jump to the Monte Carlo Simulation section.)