IRR calc Monthly vs Annual

T

tdhaist

I attempt to calculate IRR on projects that extend over a couple years. When
using a monthly model, the IRR is significantly lower than an annual model.
Is there a way of "annualizing" the monthly #? I wouldn't think it would be
as simple as multipying by 12.

or another way of asking, is one way better than the other in evaluating
projects?
 
D

Duke Carey

multiplying by 12 gives you a simple interest rate

to get a monthly compounded rate use
(1+IRR)^12 - 1
 

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