IRR
Returns a Double specifying the internal rate of return for a series of periodic cash flows (payments and receipts).
Syntax: IRR( values() [ , guess ] )
- values()
- required Array of Double specifying cash flow values. The array must contain at least one negative value (a payment) and one positive value (a receipt).
- guess
- optional Variant specifying an estimate of the value to be returned by IRR. If omitted, guess is 0.1 (10 percent).
The internal rate of return is the interest rate received for an investment consisting of payments and receipts that occur at regular intervals.
The IRR function uses the order of values within the array to interpret the order of payments and receipts. The payment and receipt values must be in the correct sequence. The cash flow for each period doesn’t have to be fixed, as it is for an annuity.
IRR is calculated by iteration. Starting with the value of guess, IRR cycles through the calculation until the result is accurate to within 0.00001 percent, and fails if it finds none in 20 tries.
Warning BETA 1034
Given an array that has never been sized (Dim A() As Double with no ReDim, or one emptied by Erase), IRR ends the program with an access violation, in a 32-bit and a 64-bit build. VB6 and 64-bit VBA raise error 5, Invalid procedure call or argument.
Common Errors
| Error | When |
|---|---|
-2147467259 (&H80004005), Unspecified error | values has no element less than 0 or none greater than 0, or IRR finds no result in 20 tries from guess (a guess of -1 or less, or far from the result, included) |
-2147418113 (&H8000FFFF), Catastrophic failure | values has more than one dimension |
13 (&HD), Type mismatch | guess is a string that is not a number |
94 (&H5E), Invalid use of Null | guess is Null |
Note BETA 1034
When values has no element less than 0 or none greater than 0, or IRR finds no result in 20 tries from guess (a guess of -1 or less, or far from the result, included), VB6 and 64-bit VBA raise error 5 (&H5), Invalid procedure call or argument, instead.
Note BETA 1034
When values has more than one dimension, VB6 and 64-bit VBA raise error 5 (&H5), Invalid procedure call or argument, instead.
Example
In this example, the IRR function returns the internal rate of return for a series of 5 cash flows contained in the array Values(). The first array element is a negative cash flow representing business start-up costs. The remaining four cash flows represent positive cash flows for the subsequent 4 years. Guess is the estimated internal rate of return.
Dim Guess, Fmt, RetRate, Msg
Static Values(5) As Double ' Set up array.
Guess = .1 ' Guess starts at 10 percent.
Fmt = "#0.00" ' Define percentage format.
Values(0) = -70000 ' Business start-up costs.
' Positive cash flows reflecting income for four successive years.
Values(1) = 22000 : Values(2) = 25000
Values(3) = 28000 : Values(4) = 31000
RetRate = IRR(Values(), Guess) * 100 ' Calculate internal rate.
Msg = "The internal rate of return for these five cash flows is "
Msg = Msg & Format(RetRate, Fmt) & " percent."
MsgBox Msg ' Display internal return rate.