Manuals/calci/IRR

IRR(v,g)

• $v$ is the array of values.
• $g$ is the number is close to the result of IRR.

Description

• This function gives the internal rate of return of a cash flow stream associated with an investment.
• The Internal Rate of Return is the interest rate that makes the Net Present Value zero.
• $IRR$ is similar to the net present value calculation.
• In $IRR(v,g)$,$v$ is an values which is the array or a reference to cells that contain numbers for which you want to calculate the internal rate of return.
• $g$ is the guess which is indicating the number that you guess is close to the result of $IRR$.
• $v$ must have atleast one positive and one negative value to find the internal rate of return.
• The value of $v$ can be array or reference argument contains text, logical values or empty cells, the values which are ignored.
• The $g$ value is optional, when we are omitting the $g$ value,by default it will consider the value as 10%(0.1).
• The calculation of $IRR$ uses an iterative method.
• The value is starting from g value and doing the calculation until the result is accurate within 0.00001%.
• Also $IRR$ can't find the result that works after 20 tries.
• The calculating $IRR$ for cash flows occurring at any other regular intervals like quarterly or semi annual by using respective factor.
• $IRR$ is also called effective interest rate, or rate of return.
• It is used to evaluate an investment or project.
• The function will return the result as error after the 20 tries in the iterative method.

Examples

	A	B
1	-100000	-500000
2	10000	32000
3	28000	45000
4	20000	100000
5	32500	150000
6	59000	275000
7	1000	67000

1. =IRR(A1:A6)=12.04%
2. =IRR(A1:A5,20%) = 11.88%
3. =IRR(B1:B7) = 7.31%%
4. =IRR(B1:B5,5%)= -12.47%

Related Videos

Internal Rate of Return

See Also

• MIRR
• NPV
• RATE
• XIRR
• XNPV

References

Internal rate of return