Proper use of the MIRR (and IRR)
 

I want to provide a MIRR and an IRR analysis for the implementation of
proposed systems. As such I have 5 years of expenses for the analysis period
and 5 years of revenue. All of these values are from the year-end.

How do I setup the IRR and MIRR parameters. The function prototypes (and the
Excel help) slightly confuses me concerning the values parameter:
MIRR(values,finance_rate,reinvest_rate)

IRR(values,guess)

Thanks in advance for your adivce,

Rick

Proper use of the MIRR (and IRR)
 

IRR(values,guess)

values are a range of values ie B2:B6, where B2=initial cash outflow/inflow
(t0)
B3=cashflow at theend of t1...
and the guess is a seed value which is optional

MIRR

MIRR(values,finance_rate,reinvest_rate)

Values are the same as IRR
Finance_rate is the interest rate you pay on the money used in the cash flows.
Reinvest_rate is the interest rate you receive on the cash flows as you
reinvest them.

eg:
IRR(B2:B6)
MIRR(B2:B6,.1,.05)

--
Hope this helps
Martin Fishlock, Bangkok, Thailand
Please do not forget to rate this reply.


"nostabo" wrote:

I want to provide a MIRR and an IRR analysis for the implementation of
proposed systems. As such I have 5 years of expenses for the analysis period
and 5 years of revenue. All of these values are from the year-end.

How do I setup the IRR and MIRR parameters. The function prototypes (and the
Excel help) slightly confuses me concerning the values parameter:
MIRR(values,finance_rate,reinvest_rate)

IRR(values,guess)

Thanks in advance for your adivce,

Rick

Proper use of the MIRR (and IRR)
 

Thanks Martin,

But what really has me confused is how to list the values. If I have
outflows and inflows for 5 years, do I list the outflows first or alternate
them by year like:
(Year 1 outflow, Year 1 inflow, Year 2 outflow, Year 2 inflow, Year 3
outflow, Year 3 inflow, Year 4 outflow, Year 4 inflow, Year 5 outflow, Year
5 inflow)

....and if there is a year or two with a zero outflow and/or inflow should
they be listed as 0 in the range (array), or simply left out.

Rick

"Martin Fishlock" wrote in message
...
IRR(values,guess)

values are a range of values ie B2:B6, where B2=initial cash
outflow/inflow
(t0)
B3=cashflow at theend of t1...
and the guess is a seed value which is optional

MIRR

MIRR(values,finance_rate,reinvest_rate)

Values are the same as IRR
Finance_rate is the interest rate you pay on the money used in the cash
flows.
Reinvest_rate is the interest rate you receive on the cash flows as you
reinvest them.

eg:
IRR(B2:B6)
MIRR(B2:B6,.1,.05)

--
Hope this helps
Martin Fishlock, Bangkok, Thailand
Please do not forget to rate this reply.


"nostabo" wrote:

I want to provide a MIRR and an IRR analysis for the implementation of
proposed systems. As such I have 5 years of expenses for the analysis
period
and 5 years of revenue. All of these values are from the year-end.

How do I setup the IRR and MIRR parameters. The function prototypes (and
the
Excel help) slightly confuses me concerning the values parameter:
MIRR(values,finance_rate,reinvest_rate)

IRR(values,guess)

Thanks in advance for your adivce,

Rick

Proper use of the MIRR (and IRR)
 

Rick,

It is the net cash flow.

So you enter your inflows and your outflows in the normal statement format
and have a net cash flow for the period/year and then you apply the IRR/MIRR
formula on the net values with -ves as outflows and +ves as inflows or the
other way around if you prefer.
--
Hope this helps
Martin Fishlock, Bangkok, Thailand
Please do not forget to rate this reply.


"nostabo" wrote:

Thanks Martin,

But what really has me confused is how to list the values. If I have
outflows and inflows for 5 years, do I list the outflows first or alternate
them by year like:
(Year 1 outflow, Year 1 inflow, Year 2 outflow, Year 2 inflow, Year 3
outflow, Year 3 inflow, Year 4 outflow, Year 4 inflow, Year 5 outflow, Year
5 inflow)

....and if there is a year or two with a zero outflow and/or inflow should
they be listed as 0 in the range (array), or simply left out.

Rick

"Martin Fishlock" wrote in message
...
IRR(values,guess)

values are a range of values ie B2:B6, where B2=initial cash
outflow/inflow
(t0)
B3=cashflow at theend of t1...
and the guess is a seed value which is optional

MIRR

MIRR(values,finance_rate,reinvest_rate)

Values are the same as IRR
Finance_rate is the interest rate you pay on the money used in the cash
flows.
Reinvest_rate is the interest rate you receive on the cash flows as you
reinvest them.

eg:
IRR(B2:B6)
MIRR(B2:B6,.1,.05)

--
Hope this helps
Martin Fishlock, Bangkok, Thailand
Please do not forget to rate this reply.


"nostabo" wrote:

I want to provide a MIRR and an IRR analysis for the implementation of
proposed systems. As such I have 5 years of expenses for the analysis
period
and 5 years of revenue. All of these values are from the year-end.

How do I setup the IRR and MIRR parameters. The function prototypes (and
the
Excel help) slightly confuses me concerning the values parameter:
MIRR(values,finance_rate,reinvest_rate)

IRR(values,guess)

Thanks in advance for your adivce,

Rick