Question

how to calculate irr in excel

Answer 1

IRR(values, [guess])

Values An array or a reference to cells that contain numbers for which to calculate the internal rate of return. Values must contain at least one positive value and one negative value to calculate the internal rate of return. IRR uses the order of values to interpret the order of cash flows. Be sure to enter your payment and income values in the sequence you want.If an array or reference argument contains text, logical values, or empty cells, those values are ignored. Guess A number that you guess is close to the result of IRR. Microsoft Excel uses an iterative technique for calculating IRR. Starting with guess, IRR cycles through the calculation until the result is accurate within 0.00001 percent. If IRR can't find a result that works after 20 tries, the #NUM! error value is returned.If IRR gives the #NUM! error value, or if the result is not close to what you expected, try again with a different value for guess.

Answer 2

There are two ways to calculate IRR in Excel:

using one of the three built-in IRR formulas

breaking out the component cash flows and calculating each step individually, then using those calculations as inputs to an IRR formula.  As we detailed above, since the IRR is a derivation there is no easy way to break it out by hand.