Microsoft Excel Data Analysis and Business Modeling (Office 2021 and Microsoft 365), 7th Edition

Chapter 9

The internal rate of return: IRR, XIRR, and MIRR functions

Questions answered in this chapter:

• How can I find the internal rate of return (IRR) of cash flows?

• Does a project always have a unique IRR?

• Are there conditions that guarantee a project will have a unique IRR?

• If two projects each have a single IRR, how do I use the projects’ IRRs?

• How can I find the IRR of irregularly spaced cash flows?

• What is the MIRR, and how do I compute it?

The net present value (NPV) of a sequence of cash flows depends on the interest rate (r) used. For example, if you consider cash flows for Projects 1 and 2 (see the worksheet IRR in the file named IRR.xlsx, shown in Figure 9-1), you find that for r = 0.2, Project 2 has a larger NPV, and for r = ...