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#1
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XIRR
Anyone have GOOD examples with explanation in text to demonstrate when/where
you'd use this function & why? Thanks Bob Umlas Excel MVP but not a financial function whiz! |
#2
Posted to microsoft.public.excel.worksheet.functions
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XIRR
Bob Umlas, Excel MVP
wrote... Anyone have GOOD examples with explanation in text to demonstrate when/where you'd use this function & why? .... The description in online help isn't sufficient? Well, maybe it isn't. In theory the IRR function could handle any cashflow no matter how irregular if each cell (or each item if the 1st argument were an array) represented a month, week, day, hour, minute, etc. and the cells corresponding to periods without cashflows contained zeros. However, such cashflow ranges (or arrays) could become quite large and contain mostly zeros. In reality the IRR function breaks down when its 1st argument contains more than a few hundred cells. XIRR requires only the nonzero cashflows plus their dates, so data entry could be much less than for and equivalent cashflow for IRR. It may also break down if there are more than a few hundred nonzero cashflows (never torture tested it), but it's much more flexible than IRR. So in short XIRR handles a breader set of cashflows than IRR. As for examples and when you'd use IRR or XIRR, why do you want to know? If it's purely personal interest, wouldn't you be better off reading a text on finance? Even if it's for a presentation to others, wouldn't learning the subject matter be a better way of understanding IRR and XIRR? |
#3
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XIRR
I'm actually teaching a class and the client wants an explanation with
examples of CAGR(a.k.a XIRR), and I don't really have the time to read a financial book to help explain, hence I asked! Not at all for personal use. And I don't know of a book which deals specifically with XIRR/IRR/NPV/PV... etc functions in Excel. "Harlan Grove" wrote: Bob Umlas, Excel MVP wrote... Anyone have GOOD examples with explanation in text to demonstrate when/where you'd use this function & why? .... The description in online help isn't sufficient? Well, maybe it isn't. In theory the IRR function could handle any cashflow no matter how irregular if each cell (or each item if the 1st argument were an array) represented a month, week, day, hour, minute, etc. and the cells corresponding to periods without cashflows contained zeros. However, such cashflow ranges (or arrays) could become quite large and contain mostly zeros. In reality the IRR function breaks down when its 1st argument contains more than a few hundred cells. XIRR requires only the nonzero cashflows plus their dates, so data entry could be much less than for and equivalent cashflow for IRR. It may also break down if there are more than a few hundred nonzero cashflows (never torture tested it), but it's much more flexible than IRR. So in short XIRR handles a breader set of cashflows than IRR. As for examples and when you'd use IRR or XIRR, why do you want to know? If it's purely personal interest, wouldn't you be better off reading a text on finance? Even if it's for a presentation to others, wouldn't learning the subject matter be a better way of understanding IRR and XIRR? |
#4
Posted to microsoft.public.excel.worksheet.functions
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XIRR
In my opinion, the most common use of XIRR is to calculate your rate of return
on investment. Suppose you invested the following amounts on the specified dates: 01/15/05 $10,000 03/25/05 $1,000 11/22/05 $3,000 12/24/05 $2,000- [withdrawn] 06/15/06 $5,000 On December 31, 2006, your investment was worth $25,000. What's your rate of return? Add a row at the end for 12/31/06 and -25,000, and feed the ranges to XIRR, and it will calculate the rate for you. -- Regards, Fred PS. If you want to know *how* XIRR does it, just let me know. "Bob Umlas, Excel MVP" wrote in message ... Anyone have GOOD examples with explanation in text to demonstrate when/where you'd use this function & why? Thanks Bob Umlas Excel MVP but not a financial function whiz! |
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