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=IRR()
A number that you guess is close to the result of IRR.
Applies To:
Excel for Microsoft 365Excel for Microsoft 365 for MacExcel 2024Excel 2024 for MacExcel 2021Excel 2021 for MacExcel 2019Excel 2016
=IRR(values, [guess])
Hover argument names in the table for details.
Output typeNumber
Popularity45 / 100
VolatileNo
Dynamic ArrayNo
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◧ Arguments
| Argument | Type | Required | Description |
|---|---|---|---|
values |
Range | Required | An array or a reference to cells that contain numbers for which you want to calculate the internal rate of return. |
iRR |
Number | Optional | uses the order of values to interpret the order of cash flows. Be sure to enter your payment and income values in the sequence you want. |
if |
Logical | Optional | an array or reference argument contains text, logical values, or empty cells, those values are ignored. |
guess |
Number | Optional | A number that you guess is close to the result of IRR. |
▣ Examples
▦ Data
| Cell | Value | Description |
|---|---|---|
A2 |
-$70,000 | Initial cost of a business |
A3 |
$12,000 | Net income for the first year |
A4 |
$15,000 | Net income for the second year |
A5 |
$18,000 | Net income for the third year |
A6 |
$21,000 | Net income for the fourth year |
A7 |
$26,000 | Net income for the fifth year |
A8 |
-$70,000 | Initial cost of a business |
A9 |
$12,000 | Net income for the first year |
A10 |
$15,000 | Net income for the second year |
A11 |
$18,000 | Net income for the third year |
A12 |
$21,000 | Net income for the fourth year |
A13 |
$26,000 | Net income for the fifth year |
Investment's internal rate of return after four years
=IRR(A2:A6)
Result:
-2.1%
Internal rate of return after five years
=IRR(A2:A7)
Result:
8.7%
To calculate the internal rate of return after two years, you need to include a guess (in this example, -10%).
=IRR(A2:A4,-10%)
Result:
-44.4%
§ Remarks
- IRR is closely related to NPV, the net present value function. The rate of return calculated by IRR is the interest rate corresponding to a 0 (zero) net present value. The following formula demonstrates how NPV and IRR are related:
- NPV(IRR(A2:A7),A2:A7) equals 1.79E-09 [Within the accuracy of the IRR calculation, the value is effectively 0 (zero).]
✦ Tips
- IRR is closely related to NPV, the net present value function. The rate of return calculated by IRR is the interest rate corresponding to a 0 (zero) net present value. The following formula demonstrates how NPV and IRR are related:
- NPV(IRR(A2:A7),A2:A7) equals 1.79E-09 [Within the accuracy of the IRR calculation, the value is effectively 0 (zero).]
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