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    sjafsa's Avatar
    sjafsa Posts: 3, Reputation: 1
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    #1

    Dec 29, 2006, 03:19 PM
    Internal Rate of Return Calculation and Formula
    If I have the following cash flows, what is the internal rate of return (IRR)?

    12/31/05 invest 1052
    1/20/06 return 100
    12/1/06 return 25
    12/31/06 return 1136

    What is the formula used to calculate this IRR?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Dec 29, 2006, 10:48 PM
    See here: Internal Rate Of Return - IRR
    sjafsa's Avatar
    sjafsa Posts: 3, Reputation: 1
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    #3

    Dec 30, 2006, 07:12 AM
    Thank you.

    However, I'm looking for the specifics.

    It has been many years since I worked with the detail IRR calculations involving non-regular time intervals and I have forgotten the formulae.

    I would also assume there are some programs available to easily make these calculations.
    Are there any available?

    Steve Abramson
    Dr D's Avatar
    Dr D Posts: 698, Reputation: 127
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    #4

    Dec 30, 2006, 11:02 AM
    I think the solution would be to invest in a HP 12C financial calculator. It is less than $100; can calculate IRR as well as a multitude of other functions; is small; and would eliminate the need to master complicated formulas. I hope this helps.
    sjafsa's Avatar
    sjafsa Posts: 3, Reputation: 1
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    #5

    Dec 31, 2006, 06:20 AM
    Thanks for your response.

    I have the 12C. I simply don't remember how to do the calculation using the non-regular intervals in the example.
    msgte7's Avatar
    msgte7 Posts: 1, Reputation: 1
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    #6

    Feb 17, 2007, 01:47 PM
    Consider the purchase of a new machine at a cost of $11,070. The machine will provide $2,000 per year in cash flow for eight years. Cost of capital is 13 persent. Using the internal rate of return method, evaluate this project and indicate whether it should be undertaken
    PSUMAN99's Avatar
    PSUMAN99 Posts: 8, Reputation: 1
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    #7

    Feb 17, 2007, 06:56 PM
    Quote Originally Posted by sjafsa
    If I have the following cash flows, what is the internal rate of return (IRR)?

    12/31/05 invest 1052
    1/20/06 return 100
    12/1/06 return 25
    12/31/06 return 1136

    What is the formula used to calculate this IRR?
    Use the formulas within MS Excel. They have one for irregular intervals (I think it is XIRR but not 100% sure)
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