Excel IRR Function

  • Thread starter Thread starter Harlan
  • Start date Start date
H

Harlan

I am using Excel 2002 and when I try to the IRR function
for monthly cashflow values I'm not getting the same
numbers as if when I manually use Goal Seek function to
find the discount rate to set the sum of the discount
cashflow stream to zero.

What am I doing wrong?
 
Harlan wrote ...
I am using Excel 2002 and when I try to the IRR function
for monthly cashflow values I'm not getting the same
numbers as if when I manually use Goal Seek function to
find the discount rate to set the sum of the discount
cashflow stream to zero.

What am I doing wrong?
Click to expand...

Harlan,

You likely have multiple IRR values. If your cash flows switch sign more
than once, you will likely have multiple answers.

You might want to search Google for prior posts in the newsgroups on
multiple IRR values

http://www.google.com/advanced_group_search?q=group:*excel

Just plug in "muliple IRR" (without the quotes) into the words section.

And you can also use the same search words in "plain" Google.

Hope that helps.

Best regards,
Kevin
 
Hi Harlan!

It might be that you have the wrong formula for calculating the sum of
the discounted cash flows.

If using the NPV use:

=NPV(DiscRate,AllFlows)*(1+DiscRate)
Or
=NPV(DiscRate,AllExceptFlowPeriodZero)+FlowPeriodZero

Excel in common with other spreadsheets defines NPV different from the
definition used by Financial Calculators.

--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)
Excel and Word Function Lists (Classifications, Syntax and Arguments)
available free to good homes.
 
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