Learn how to use the Excel IRR function with syntax and examples.
The Microsoft Excel IRR function returns the internal rate of return for a series of cash flows. The cash flows must occur at regular intervals, but do not have to be the same amounts for each interval.
The syntax for the Microsoft Excel IRR function is:
IRR( range, [estimated_irr] )
range is a range of cells that represent the series of cash flows.
estimated_irr is optional. It is the your guess at the internal rate of return. If this parameter is omitted, the IRR function assumes an estimated_irr of 0.1 or 10%.
The IRR function can be used in the following versions of Microsoft Excel:
The IRR function can be used in Microsoft Excel as the following type of function:
Let's look at some Excel IRR function examples and explore how to use the IRR function as a worksheet function in Microsoft Excel:
Based on the Excel spreadsheet above:
This first example returns an internal rate of return of 28%. It assumes that you start a business at a cost of $7,500. You net the following income for the first four years: $3,000, $5,000, $1,200, and $4,000.
This next example returns an internal rate of return of 5%. It assumes that you start a business at a cost of $10,000. You net the following income for the first three years: $3,400, $6,500, and $1,000.
The IRR function can also be used in VBA code in Microsoft Excel.
Let's look at some Excel IRR function examples and explore how to use the IRR function in Excel VBA code:
Dim LNumber As Double Static Values(5) As Double Values(0) = -7500 Values(1) = 3000 Values(2) = 5000 Values(3) = 1200 Values(4) = 4000 LNumber = Irr(Values())
In this example, the variable called LNumber would now contain the value of 0.276668413.