On Thu, 15 May 2008 06:20:01 -0700, Dkline
wrote:

I match what you have in your example. To convert to a monthly term is it as
simple as dividing by 12?

Probably not.

I always get confused when trying to use the terms nominal and effective. So I
won't use them in this discussion <g.

The XIRR result - 25.0947% - means that if you invested $1 at the beginning of
the year, at the end of a 365-day year you should have $1.250947. In other
words, no compounding of the interest.

I assume you are in a compound interest situation, and interested in monthly
returns. If you merely took the XIRR result, divided it by 12, and then
compounded that return 12 times, you would calculate a higher ending value than
is implied by the XIRR result (specifically, you would calculate $1.28192)

There are a variety of ways to make the adjustment to come up with an interest
rate which, when compounded monthly, will give you the correct annual result.

joeu2004 gave you two methods.

Another method is to use the Excel NOMINAL function and divide that result by
12:

=NOMINAL(your_xirr_formula,12) / 12

It's about 1.8834%

That number, applied to $1 and compounded 12 times, will result in an ending
value of $1.250947 as also predicted by the XIRR function.
--ron