rate of return
How can you calculate the rate of return for a series of payments not
necessarily equal? |
rate of return
Look in Help for IRR or XIR
best wishes -- Bernard V Liengme www.stfx.ca/people/bliengme remove caps from email "A.R.T." wrote in message ... How can you calculate the rate of return for a series of payments not necessarily equal? |
rate of return
Yes you can. It's the XIRR function, which is part of the Analysis Tookpal
addin. -- Regards, Fred "A.R.T." wrote in message ... How can you calculate the rate of return for a series of payments not necessarily equal? |
rate of return
"A.R.T." wrote:
How can you calculate the rate of return for a series of payments not necessarily equal? There is a recurring misconception in the responses to such questions. Use IRR whenever the payment __periods__ are equal, even if the payment amounts (aka cash flows) are unequal. Use XIRR whenever the payment __periods__ are unequal, whether or not the payment amounts are equal. Your question is ambiguous with respect to which case applies. Note: If the payment periods are "equal", e.g. "once a month", but interest is compounded daily, you might want to use XIRR since each month contains a different number of days (compounding periods). |
rate of return
You're correct that IRR was designed for situations with equal payment periods,
even if amounts are unequal. However, IRR returns a periodic interest rate (like Rate does). So if your payments are quarterly, you get a quarterly interest rate. This confuses a lot of people, because they want an annual rate, which is why XIRR works so well for them. -- Regards, Fred " wrote in message ... "A.R.T." wrote: How can you calculate the rate of return for a series of payments not necessarily equal? There is a recurring misconception in the responses to such questions. Use IRR whenever the payment __periods__ are equal, even if the payment amounts (aka cash flows) are unequal. Use XIRR whenever the payment __periods__ are unequal, whether or not the payment amounts are equal. Your question is ambiguous with respect to which case applies. Note: If the payment periods are "equal", e.g. "once a month", but interest is compounded daily, you might want to use XIRR since each month contains a different number of days (compounding periods). |
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