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#1
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calculating IRR
Excel easily calculates IRRs where cash initially is invested/spent and then
followed by a series of incomes. However, I have situation where I need to calculate IRR where the cash invested is spread over a number of years, rather than being invested as a lump sum up front. Incomes start before the cash is fully invested and continue thereafter. How do you calculate IRR in this instance? Thanks in advance |
#2
Posted to microsoft.public.excel.worksheet.functions
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calculating IRR
On Thu, 14 Feb 2008 02:54:02 -0800, naffyb
wrote: Excel easily calculates IRRs where cash initially is invested/spent and then followed by a series of incomes. However, I have situation where I need to calculate IRR where the cash invested is spread over a number of years, rather than being invested as a lump sum up front. Incomes start before the cash is fully invested and continue thereafter. How do you calculate IRR in this instance? Thanks in advance If the cash flows occur at regular intervals, you use IRR -- the fact that some are income and some are investment makes no difference so long as you use the proper sign. If the cash flows occur at irregular intervals, you use XIRR, with the dates of the cash flows. --ron |
#3
Posted to microsoft.public.excel.worksheet.functions
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calculating IRR
"naffyb" wrote:
Excel easily calculates IRRs where cash initially is invested/spent and then followed by a series of incomes. However, I have situation where I need to calculate IRR where the cash invested is spread over a number of years, rather than being invested as a lump sum up front. Incomes start before the cash is fully invested and continue thereafter. How do you calculate IRR in this instance? The IRR() function should work for your case, as well. It is not limited to one negative cash flow followed by only positive cash flows. What makes you think it is? Post an example of your usage. PS: If the cash flows come at irregular intervals -- not simply annually or monthly or weekly, for example -- then use XIRR(). Also, be sure to follow the sign convention consistently, typically negative numbers for outflows and positive numbers for inflows. |
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