Returns the internal rate of return of a set of cash flows represented by a numerical value. These cash flows need not be balanced, but as annuities, they must be generated at regular intervals,
Such as by month or by year. The internal rate of return (IRR) is the payback rate of the investment, which includes regular payments (negative) and regular income (positive).
grammar
IRR(values,guess)
values is a reference to an array or cell that contains the number used to calculate the returned internal rate of return.
Values must contain at least one positive and one negative value to calculate the internal rate of return.
The function IRR interprets the order of cash flows in terms of the order of values. It should therefore be ascertained that the values of payments and receipts are entered in the order in which they are required.
- If the array or reference contains text, logical values, or blank cells, these values are ignored.
guess is the estimate of the result calculated for the function IRR.
- The WPS table uses an iterative method to compute the function IRR. Starting with guess, the function IRR loops through the calculation until the accuracy of the result reaches 0.00001%.
If the IRR function does not find a result after 20 iterations, the #NUM! Error value is returned. .
- In most cases, it is not necessary to provide the guess value for the calculation of the function IRR. If guess is omitted, assume it is 0.1 (10%).
- If IRR returns the #NUM! Error value , or the result is not close to the expected value, you can try again with another guess value.
Instructions
The function IRR is closely related to the function NPV (net present value function). The rate of return calculated by the function IRR is the interest rate when the net present value is 0.
- The following formula shows the relationship between the function NPV and the function IRR:
NPV(IRR(B1:B6),B1:B6) is equal to 3.60E-08 (the value 3.60E-08 can be regarded as a valid value of 0 in the precision requirements of the function IRR calculation).
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