Syntax
| Parameter | Description |
|---|---|
| values | Parameter of the IRR function. |
| [guess] | (Optional.) Parameter of the IRR function. |
Examples
Business project evaluation
=IRR({-100000, 30000, 35000, 40000, 45000})
Rental property annual returns
=IRR({-200000, 18000, 18000, 18000, 18000, 250000})
Project that destroys value
=IRR({-50000, 10000, 10000, 10000, 10000})
Common Errors
IRR cannot find a result after 20 iterations. Provide a guess argument, or the cash flows may not have a valid IRR (e.g., all positive or all negative values).
The values range contains non-numeric entries.
Tips
Cash flows need at least one negative and one positive value. Typically, the first value is negative (initial investment) and subsequent values are positive (returns).
IRR implicitly assumes you reinvest all returns at the IRR rate itself, which may be unrealistic. For a more conservative estimate, consider MIRR (Modified IRR) if available.
If your IRR exceeds your cost of capital (e.g., 14% IRR vs 10% required return), the project creates value. If it's below, pass on it.
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