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Financial
The Excel IRR function returns the internal rate of return of a series of equally spaced cash flows — the discount rate at which the investment’s NPV equals zero. Compare it to your hurdle rate to accept or reject a project.
Quick answer:
=IRR({-10000, 3000, 4200, 5000}) // about 11.3%
Syntax
=IRR(values, [guess])
| Argument | Description | |
|---|---|---|
values | Required | A range of cash flows including at least one negative and one positive value, in time order. |
guess | Optional | Starting estimate (default 10%). |
How to use it
The first cash flow is usually the negative initial investment; the rest are returns:
=IRR({-10000, 3000, 4200, 5000}) // about 11.3%
IRR needs a sign change (at least one negative and one positive flow) and assumes equal time spacing. For irregular dates use XIRR.
Try it: interactive demo
Live demo
Change the inputs and watch the result update.
Result:
Practice workbook
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Frequently asked questions
What does IRR represent?
The annualized return rate at which the project’s NPV is zero — its effective yield.
IRR vs XIRR?
IRR assumes equally spaced periods; XIRR uses the actual dates of each cash flow.
Why #NUM!?
No sign change in the cash flows, or it didn’t converge — supply a guess.
Can there be multiple IRRs?
Yes — cash flows that change sign more than once can have several IRRs; XNPV/NPV profiling is safer then.
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