calculating IRR

[naffyb]

Excel easily calculates IRRs where cash initially is invested/spent and then
followed by a series of incomes. However, I have situation where I need to
calculate IRR where the cash invested is spread over a number of years,
rather than being invested as a lump sum up front. Incomes start before the
cash is fully invested and continue thereafter.

How do you calculate IRR in this instance?

Thanks in advance

 

[Ron Rosenfeld]

Excel easily calculates IRRs where cash initially is invested/spent and then
followed by a series of incomes. However, I have situation where I need to
calculate IRR where the cash invested is spread over a number of years,
rather than being invested as a lump sum up front. Incomes start before the
cash is fully invested and continue thereafter.

How do you calculate IRR in this instance?

Thanks in advance

If the cash flows occur at regular intervals, you use IRR -- the fact that some
are income and some are investment makes no difference so long as you use the
proper sign.

If the cash flows occur at irregular intervals, you use XIRR, with the dates of
the cash flows.
--ron

 

[joeu2004]

Excel easily calculates IRRs where cash initially is invested/spent
and then followed by a series of incomes. However, I have
situation where I need to calculate IRR where the cash invested
is spread over a number of years, rather than being invested as
a lump sum up front. Incomes start before the cash is fully
invested and continue thereafter.
How do you calculate IRR in this instance?

The IRR() function should work for your case, as well. It is not limited to
one negative cash flow followed by only positive cash flows.

What makes you think it is? Post an example of your usage.

PS: If the cash flows come at irregular intervals -- not simply annually or
monthly or weekly, for example -- then use XIRR(). Also, be sure to follow
the sign convention consistently, typically negative numbers for outflows and
positive numbers for inflows.