Returns the internal rate of return for a series of periodic cash flows (payments and receipts).
IRR(values()[, guess])
The IRR function has these named arguments:
|
Part |
Description |
|
values() |
Array of cash flow values. The array must contain at least one negative value (a payment) and one positive value (a receipt). |
|
guess |
Value you estimate will be returned by IRR. If omitted, guess is 0.1 (10 percent). |
The internal rate of return is the interest rate received for an investment consisting of payments and receipts that occur at regular intervals.
The IRR function uses the order of values within the array to interpret the order of payments and receipts. Be sure to enter your payment and receipt values in the correct sequence. The cash flow for each period doesn’t have to be constant, as it would for an annuity.
IRR is calculated by iteration. Starting with the value of guess, IRR cycles through the calculation until the result is accurate to within 0.00001 percent. If, after 20 tries, it can’t find a result, IRR fails.
In this example, the IRR function returns the internal rate of return for a series of five cash flows contained in the array Values(). The first array element is a negative cash flow representing business start-up costs. The remaining four cash flows represent positive cash flows for the subsequent four years. Guess is the estimated internal rate of return.
Static Values(5) As Double ' Set up array.= .1 ' Guess starts at 10 percent.= "#0.00" ' Define percentage format.(0) = -70000 ' Business start-up costs. ' Positive cash flows reflecting income for four successive years.(1) = 22000 : Values(2) = 25000(3) = 28000 : Values(4) = 31000= IRR(Values(), Guess) * 100 ' Calculate internal rate.= "The internal rate of return for these five cash flows is "= Msg & Format(RetRate, Fmt) & " percent."Msg ' Display internal return rate.