# irr - Internal Rate of Return IRR One way to determine the...

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Internal Rate of Return – IRR One way to determine the internal rate of return of a project is to use linear interpolation. The manual procedures for performing linear interpolation are explained and demonstrated in Chapter 16, on pages 719 to 720. Excel has a financial function that allows you to calculate the internal rate of return easily. Syntax =IRR(values,guess) Values – numbers for which the internal rate of return is to be calculated - must contain at least one negative and one positive number Guess – to start the calculation process, Excel needs a number entered here. If no number is entered, it defaults to 0.1 (10%). Given below are step-by-step instructions for creating a spreadsheet and using it to calculate the internal rate of return using Excel. General Example To calculate the internal rate of return (IRR) of a project, create the following spreadsheet by following steps 1 to 6. Step 1 : Enter the titles shown in cells A1, C2, D2, A3, and A11 of the spreadsheet above. 1

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Step 2 : Enter the initial cash outlay in cell C3. Enter this amount as a negative number to show that it is a cash outflow. Step 3
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irr - Internal Rate of Return IRR One way to determine the...

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