IRR function
Summary
Returns the internal rate of return for a series of periodic cash flows (payments and receipts).
Syntax
IRR(values(), [ guess ])
The IRR function has these named arguments:
Part
Description
values()Required. Array of Double specifying cash flow values. The array must contain at least one negative value (a payment) and one positive value (a receipt).
guessOptional. Variant specifying value that you estimate will be returned by IRR. If omitted, guess is 0.1 (10 percent).
Part
Description
values()Required. Array of Double specifying cash flow values. The array must contain at least one negative value (a payment) and one positive value (a receipt).
guessOptional. Variant specifying value that you estimate will be returned by IRR. If omitted, guess is 0.1 (10 percent).
Example
Example
In this example, the IRR function returns the internal rate of return for a series of 5 cash flows contained in the array Values(). The first array element is a negative cash flow representing business start-up costs. The remaining four cash flows represent positive cash flows for the subsequent 4 years. Guess is the estimated internal rate of return.
Dim Guess, Fmt, RetRate, Msg
Static Values(5) As Double ' Set up array.
Guess = .1 ' Guess starts at 10 percent.
Fmt = "#0.00" ' Define percentage format.
Values(0) = -70000 ' Business start-up costs.
' Positive cash flows reflecting income for four successive years.
Values(1) = 22000 : Values(2) = 25000
Values(3) = 28000 : Values(4) = 31000
RetRate = IRR(Values(), Guess) * 100 ' Calculate internal rate.
Msg = "The internal rate of return for these five cash flows is "
Msg = Msg & Format(RetRate, Fmt) & " percent."
MsgBox Msg ' Display internal return rate.
In this example, the IRR function returns the internal rate of return for a series of 5 cash flows contained in the array Values(). The first array element is a negative cash flow representing business start-up costs. The remaining four cash flows represent positive cash flows for the subsequent 4 years. Guess is the estimated internal rate of return.
Dim Guess, Fmt, RetRate, Msg
Static Values(5) As Double ' Set up array.
Guess = .1 ' Guess starts at 10 percent.
Fmt = "#0.00" ' Define percentage format.
Values(0) = -70000 ' Business start-up costs.
' Positive cash flows reflecting income for four successive years.
Values(1) = 22000 : Values(2) = 25000
Values(3) = 28000 : Values(4) = 31000
RetRate = IRR(Values(), Guess) * 100 ' Calculate internal rate.
Msg = "The internal rate of return for these five cash flows is "
Msg = Msg & Format(RetRate, Fmt) & " percent."
MsgBox Msg ' Display internal return rate.