I have cash flows for an investment as follows:

Initial Investment: -$8
Year 1: +$1.88
Year 2: +$1.88
Year 3: -$1.12

When Year 3 is positive the IRR on the range of four values works fine.
When Year 3 is negative - as in the above example - IRR gives #NUM error.
Why is this?

Also, why does IRR require you to supply a guess for year 3 if no value is
supplied?

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Will