I have searched the communities and found tons and tons of information about the calculation of NPV & IRR. But here I want to know how to get the value of the NPV & IRR from the **FINANCIAL ROLLUP** (hierarchy page) of an investment.

I don't believe it is stored, but calculated, and It doesn't seem to be simply the sum of all the NPV's / IRR's of the sub-investments.

Can someone point me to a document, or explain the calculation method of these?

(please only for the financial rollup of an invesmtent in Hierachy)

Help will be greatly appreciated,

Anthony:

You are correct that it is not stored, it is calculated. The way that NPV and IRR is calculated is somewhat more complicated than can be reviewed here, and I recommend a short visit to Wikipedia or similar site for the formulas. But, in short, they are a means of using the time value of money to determine the value of a given investment. That means that an investment whose benefits occur sooner in relation to the costs will have a higher value than one with more deferred benefits, assuming that the cost/benefit values are the same. And, you cannot simply add the NPVs of two projects to see a valid value of the combined projects, as their costs and benefits may happen over different time-frames. When projects are combined, you affect the dynamics of the time-phasing, as well as the weighting of the costs and benefits.

The NPV or IRR at a Parent level in the hierarchy is a result of first adding the time-phased costs and time-phased benefits of the child investments and then running the calculation on that combination. That result will almost always be a different value than a simple summing of the child NPV/IRR values. You can run some test cases in Excel to see the impact of combing projects.

John