IRR Logic
 

I have a question on how the IRR function thinks. In the case of where there
are multiple outflows and inflows at various points in time like below which
causes multiple results, is the result displayed the number closest to 10%?
How does it decide what answer to give you?

Period 1 -1,000
Period 2 6,000
Period 3 -11,000
Period 4 6,000

Thanks,

Carrie

IRR Logic
 

=IRR(values,[guess])

Microsoft Excel uses an iterative technique for calculating IRR.
Starting with the [guess], IRR cycles through the calculation until the
result is accurate within 0.00001 percent. If IRR can't find a result
that works after 20 tries, the #NUM! error value is returned.

In most cases you do not need to provide guess for the IRR calculation.
If guess is omitted, it is assumed to be 0.1 (10 percent).


--
Lotus123
------------------------------------------------------------------------
Lotus123's Profile: http://www.excelforum.com/member.php...o&userid=28611
View this thread: http://www.excelforum.com/showthread...hreadid=486319

IRR Logic
 

Right, but what I need to know is when there is more than one possible answer
to the IRR calculation, which of the answers does it give you - the lowest or
the one closest to it's starting point (which would be 10% if you omit a
guess)?

Thanks,

Carrie

"Lotus123" wrote:


=IRR(values,[guess])

Microsoft Excel uses an iterative technique for calculating IRR.
Starting with the [guess], IRR cycles through the calculation until the
result is accurate within 0.00001 percent. If IRR can't find a result
that works after 20 tries, the #NUM! error value is returned.

In most cases you do not need to provide guess for the IRR calculation.
If guess is omitted, it is assumed to be 0.1 (10 percent).


--
Lotus123
------------------------------------------------------------------------
Lotus123's Profile: http://www.excelforum.com/member.php...o&userid=28611
View this thread: http://www.excelforum.com/showthread...hreadid=486319