VB.NET Language in a Nutshell, Second Edition

Name

IRR Function

Class

Microsoft.VisualBasic.Financial

Syntax

IRR(valuearray(  )[, guess])

valuearray( ) (required; array of Double)

An array of cash flow values

guess (optional; Double)

Estimated value to be returned by the function

Return Value

A Double representing the internal rate of return

Description

Calculates the internal rate of return for a series of periodic cash flows (payments and receipts).

The internal rate of return is the interest rate generated by an investment consisting of payments and receipts that occur at regular intervals. It is generally compared to a “hurdle rate,” or a minimum return, to determine whether a particular investment should be made.

Rules at a Glance

• valuearray must be a one-dimensional array that contains at least one negative value (a payment) and one positive value (a receipt).

• Individual members of valuearray are interpreted sequentially. That is, valuearray(0) is the first cash flow, valuearray(1) is the second, etc.

• If guess is omitted, the default value of 0.1 is used.

• IRR begins with guess and uses iteration to derive an internal rate of return that is accurate to within 0.00001 percent. If IRR cannot do this within 20 iterations, the function fails.

Programming Tips and Gotchas

• Each element of valuearray represents a payment or a receipt that occurs at a regular time interval. If this is not the case, IRR will return erroneous results.

• If the function fails because it could not calculate an accurate result in 20 iterations, try a different ...