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ExcelXIRRFunction

Excel XIRR Function

Internal Rate of Return
The Internal Rate of Return indicates the protability of an investment and therefore is commonly used in
business, when choosing between investmentments.
This calculation uses a schedule of payments (including an initial investment and a series of net income
payments), to calculate the compounded return, assuming the Net Present Value of the investment is zero.
The value of the XIRR is calculated as the value of rate that satises the following equation:

where Pj is the j'th payment, dj is the j'th payment date and d1 is the 0'th payment date.

Basic Description
The Excel XIRR function returns the Internal Rate of Return for a supplied series of cash ows (i.e. a set of values,
which includes an initial investment value and a series of net income values).
Unlike the Excel IRR function, the series of cashows for the XIRR calculation do not necessarily have to be
periodic.
The syntax of the function is:
XIRR( values, dates, [guess] )
Where the arguments are as follows:
A reference to a range of cells containing the series of cash ows (the initial investment and the
values

net income values).

(Must contain at least one negative and at least one positive value).
A series of dates, corresponding to the cash ows.

dates

The rst date is the start of the loan/investment period and the subsequent dates refer to the dates
of the income. Therefore, subsequent dates must be later than the rst date.
An initial guess at what you think the IRR might be. This is an optional argument, which, if omitted,
takes on the default value of 0.1 (=10%).

[guess]

(Note: the [guess] is only a value for Excel to start off working with - Excel then uses an iterative
procedure to converge to the XIRR).

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ExcelXIRRFunction

Note that the dates should be input as either:

A reference to cells containing dates
or
Values returned from other Excel formulas.
Warning: If you attempt to input the dates in text format, there is a risk that Excel may misinterpret them, due to
different date systems, or date interpretation settings on your computer.

XIRR Function Example

In the spreadsheet below, the cashow for an investment is shown in cells B2 - B7. The initial investment of $100
is shown in cell B2 and the net income over 5 periods is shown in cells B3 - B7. Cells C2 - C7 show the dates for
the cashows.
The XIRR function in cell D2 shows the calculation of the Internal Rate of Return after 3 periods and the function in
cell D4 shows the Internal Rate of Return after 5 periods.
Formula:

Values

Dates

XIRR after Period 3:

Initial Investment:

-$100.00

Jan-01-2016

=XIRR( B2:B5, C2:C5 )

Period 1 Income:

$20.00

Apr-01-2016

XIRR after Period 5:

Period 2 Income:

$40.00

Oct-01-2016

=XIRR( B2:B7, C2:C7 )

Period 3 Income:

$25.00

Feb-01-2017

Period 4 Income:

$8.00

Mar-01-2017

Period 5 Income:

$15.00

Jun-01-2017

Result:

Values

Dates

XIRR after Period 3:

Initial Investment:

-$100.00

Jan-01-2016

-19.67%

Period 1 Income:

$20.00

Apr-01-2016

XIRR after Period 5:

Period 2 Income:

$40.00

Oct-01-2016

9.44%

Period 3 Income:

$25.00

Feb-01-2017

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Period 4 Income:

$8.00

Mar-01-2017

Period 5 Income:

$15.00

Jun-01-2017

Note that, in the above example, the initial investment is a negative value (as this is an outgoing payment), and the
income payments are represented by positive values.
Further information and examples of the Excel Xirr function are provided on the Microsoft Ofce website.

XIRR Function Errors

If you get an error from the Excel Xirr function this is likely to be one of the following:
Common Errors
Occurs if either:
The supplied values and dates arrays have different lengths;
#NUM!

The supplied values array doesn't contain at least one negative and at least one positive value;
Any of the supplied dates precedes the rst supplied date;
The calculation fails to converge after 100 iterations.

#VALUE!

Occurs if any of the supplied dates can't be recognised as dates in Excel.

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