On May 19, 2:03 pm, pittsburgcat
wrote:
I should have been more specific. I apologize. What I am specifically
trying to determine is: If I purchase a business for $200,000 and sell
it 5 years later for $500,000, how can I get excel to calculate the
average annual rate of return on the initial $200,000 investment.

The specifics simplify things quite a bit. But there still are
different, yet equally valid ways of stating the return on investment.

The simple annual return on investment can be computed by:

=(500000/200000 - 1) / 5

There is nothing wrong with that view of ROI. But many people prefer
a compounded rate of return -- the IRR. But in this case, you do not
need to use Excel's IRR() function.

The compounded annual rate of return can be computed by either the
following equivalent formulas:

=rate(5, 0, -200000, 500000)

=(500000/200000)^(1/5) - 1