When I used the IRR function to assess the project's return, I found the cash
flow for different lengths generate the same result. Could anybody let me
know what led to this possible error? - the only reason i can think of is
that the future cash flows are too minimal to impact the overall IRR...an
example is given

The IRR of the following two series of cash flows returned the same result
on my computer: 254%

1) -45,000 97,206 156,563 159,361 162,175 165,047 147,746
171,148 174,142 182,758 186,443 165,695
2) -45,000 97,206 156,563 159,361 162,175 165,047 147,746
171,148 174,142 182,758 186,443 165,695 192,062 195,179 199,047
201,582 179,318

Indeed if I change the period to say 20 years, it still returns the same
result!

The example you gave does not result in the same IRR
1) 253.919632%
2) 253.919986%

You can check the results by doing a reverse NPV calculation.

The reason why the results are so close togther is because by the later
periods you are effectively discounting by such a large amount to get to an
NPV of zero.


"jiang" wrote:

When I used the IRR function to assess the project's return, I found the cash
flow for different lengths generate the same result. Could anybody let me
know what led to this possible error? - the only reason i can think of is
that the future cash flows are too minimal to impact the overall IRR...an
example is given

The IRR of the following two series of cash flows returned the same result
on my computer: 254%

1) -45,000 97,206 156,563 159,361 162,175 165,047 147,746
171,148 174,142 182,758 186,443 165,695
2) -45,000 97,206 156,563 159,361 162,175 165,047 147,746
171,148 174,142 182,758 186,443 165,695 192,062 195,179 199,047
201,582 179,318

Indeed if I change the period to say 20 years, it still returns the same
result!

Many thanks for the answer - my suspicion proved right then :)

"jiang" wrote:

When I used the IRR function to assess the project's return, I found the cash
flow for different lengths generate the same result. Could anybody let me
know what led to this possible error? - the only reason i can think of is
that the future cash flows are too minimal to impact the overall IRR...an
example is given

The IRR of the following two series of cash flows returned the same result
on my computer: 254%

1) -45,000 97,206 156,563 159,361 162,175 165,047 147,746
171,148 174,142 182,758 186,443 165,695
2) -45,000 97,206 156,563 159,361 162,175 165,047 147,746
171,148 174,142 182,758 186,443 165,695 192,062 195,179 199,047
201,582 179,318

Indeed if I change the period to say 20 years, it still returns the same
result!