Calculate IRR in Excel

[superdave1984]

I am using Microsoft Excel 2007 on my windows xp computer. I am looking for information on internal rate of return function in excel 2007. Does any one know how to use internal rate of return function ( built-in formulas) in excel 2007.

[Macarenas]

Internal rate of return, useful information when you're choosing investments, is one financial calculation that is simplified by Microsoft Excel. Businesses use IRR to determine whether or not to undertake a project.IRR is based on NPV. You can think of it as a special case of NPV, where the rate of return calculated is the interest rate corresponding to a 0 (zero) net present value.

[vishodhan]

IRR Returns the internal rate of return for a series of cash flows represented by the numbers in values. These cash flows do not have to be even, as they would be for an annuity. The IRR can be defined as a discount rate which when applied to a series of cashflows generates a nil NPV. There may be more than one IRR in certain situations, additionally Excel makes this calculation deceptively simple at the risk of errors.However, the cash flows must occur at regular intervals, such as monthly or annually. The internal rate of return is the interest rate received for an investment consisting of payments (negative values) and income (positive values) that occur at regular periods.

[JonathanD]

The IRR is calculated by using the NPV function iteratively, calculating the interest to give an NPV of zero. This is often referred to as the "break-even" point where inflows equals outflows. However, the cash flows must occur at regular intervals, such as monthly or annually. The internal rate of return is the interest rate received for an investment that consists of payments (negative values) and income (positive values) that occur at regular periods. Check tis Microsoft guide for more information : Use of the IRR Function in Excel