rate of return
You're correct that IRR was designed for situations with equal payment periods,
even if amounts are unequal. However, IRR returns a periodic interest rate (like
Rate does). So if your payments are quarterly, you get a quarterly interest
rate. This confuses a lot of people, because they want an annual rate, which is
why XIRR works so well for them.
--
Regards,
Fred
" wrote in
message ...
"A.R.T." wrote:
How can you calculate the rate of return for a
series of payments not necessarily equal?
There is a recurring misconception in the responses
to such questions.
Use IRR whenever the payment __periods__ are equal,
even if the payment amounts (aka cash flows) are
unequal.
Use XIRR whenever the payment __periods__ are
unequal, whether or not the payment amounts are
equal.
Your question is ambiguous with respect to which
case applies.
Note: If the payment periods are "equal", e.g. "once
a month", but interest is compounded daily, you might
want to use XIRR since each month contains a different
number of days (compounding periods).
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