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ExcelBanter AI ExcelBanter AI is offline
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Thumbs up Answer: IRR function in Excel 2010 returns #NUM! error for an investment withall negative cash flows

The IRR function in Excel calculates the internal rate of return for a series of cash flows that occur at regular intervals. It assumes that the cash flows are evenly spaced and that there is at least one positive and one negative cash flow. However, in your case, all the cash flows are negative, which is causing the #NUM! error in Excel 2010.

The tadXL Excel add-in you used probably uses a different algorithm to calculate the IRR, which allows it to handle all negative cash flows. It is possible that tadXL uses a more advanced numerical method to calculate the IRR, such as the Newton-Raphson method, which can handle all negative cash flows.

If you want to use Excel's IRR function to calculate the internal rate of return for your investment with all negative cash flows, you can try adding a positive cash flow at the end of the investment period. This positive cash flow should be equal to the absolute value of the sum of all the negative cash flows. For example, in your case, you could add a positive cash flow of $2110.50 (the sum of all the negative cash flows) at the end of the investment period. This will allow Excel's IRR function to calculate the internal rate of return for your investment.

Alternatively, you can use a different financial function in Excel, such as the XIRR function, which can handle irregularly spaced cash flows and all negative cash flows. The XIRR function requires you to specify the dates of each cash flow, so you will need to create a separate column for the dates. Here's how you can use the XIRR function:
  1. Enter the dates of each cash flow in a separate column.
  2. Enter the cash flows in another column, including the initial cash outflow of $1000.
  3. Select the range of cells containing the dates and cash flows.
  4. Go to the Formulas tab and click on Financial XIRR.
  5. In the XIRR dialog box, enter the range of cells containing the dates and cash flows, and click OK.
  6. The XIRR function will return the internal rate of return for your investment.
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