IRR

The IRR function in Google Sheets is a powerful tool to calculate the internal rate of return on an investment based on a series of periodic cash flows. Whether you're analyzing investment opportunities, evaluating project profitability, or assessing the performance of financial instruments, the IRR function simplifies the task. Dive into our comprehensive guide to master its application.

Function Syntax and Parameters

Syntax: IRR(cashflow_amounts, [rate_guess])

Parameters:

• cashflow_amounts: An array or range containing the cash flow amounts.
• rate_guess [Optional]: A guess for the expected IRR.

Step-by-Step Tutorial

1. Using IRR with cash flow amounts:

   • Example: =IRR(A1:A5)
   • Result: Returns the internal rate of return based on the cash flow amounts in cells A1 to A5.

2. Specifying a guess for the IRR:

   • Example: =IRR(A1:A5, 0.1)
   • Result: Returns the internal rate of return based on the cash flow amounts in cells A1 to A5, with a starting guess of 0.1.

Use Cases and Scenarios

1. Investment Analysis: Evaluate the profitability of an investment.
2. Business Planning: Assess the financial viability of a project.
3. Portfolio Management: Analyze the performance of financial instruments.

Related Functions

• NPV: Calculate the net present value of cash flows.
• XIRR: Calculate the internal rate of return for cash flows that occur at irregular intervals.

Related Articles

• Understanding the Basics of Financial Formulas in Google Sheets
• How to Perform Investment Analysis in Google Sheets