Purpose
Return value
Syntax
=IRR(values,[guess])- values - Array or reference to cells that contain values.
- guess - [optional] An estimate for expected IRR. Default is .1 (10%).
How to use
The internal rate of return (IRR) is the interest rate received for an investment with payments and income occurring at regular intervals (i.e. monthly, annual). Payments are expressed as negative values and income as positive values. Amounts can vary, but intervals need to be the same. The first value is negative, since it represents an outflow.
Excel uses iteration to arrive at a result, starting with the guess (if provided) or with .1 (10%) if not. If an accurate IRR can't be calculated after a fixed number of iterations, the #NUM error is returned. A better guess will prevent this error.
Notes
- The values array must contain at least one positive value and one negative value.
- Values should be in chronological order.
- If IRR returns the #NUM! or an unexpected result, adjust guess.
Related functions
PV Function
The Excel PV function is a financial function that returns the present value of an investment. You can use the PV function to get the value in today's dollars of a series of future payments, assuming periodic, constant payments and a constant interest rate.
NPV Function
The Excel NPV function is a financial function that calculates the net present value (NPV) of an investment using a discount rate and a series of future cash flows.
