Internal rate of return template in Planning Business Modeler

The rule that you can create by using the InternalRateOfReturn template calculates the internal rate of return for a time series of cash flows. This rate is the rate over each period in the time series. If the time series period is annual, the rule computes an annual rate. If the time series period is monthly, the rule calculates a monthly rate.

The internal rate of return is that rate at which the cash flows have a net present value of zero. This value is typically used in capital budgeting or other applications that are used to rank capital investments or projects.

A rule that is created by using this template requires that you input a range of periods during which the cash flows occur. Typically, the first period is when the initial investment occurs. Inflows occur during subsequent periods.

In this topic

Prerequisites

Implementation

Placeholder substitution requirements

Prerequisites

The following list shows the tasks that are prerequisite for a rule that you create with this template:

  • You must create an Account dimension member that will store the calculated results. For example, you might name this member IRR_TargetAccount. For more information, see Create dimension members.

  • A rule that you create with this template uses a cash flow account for input, and depends on the sign of account values to calculate correct results. To guarantee correct results, values that indicate outflow or payment values should be negative numbers, and values that indicate inflow or income should be positive numbers.

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Implementation

This rule has NativeMDXScript implementation, and uses a Microsoft Office Excel function. NativeMDXScript implementations run automatically at query time. For more information, see Native code implementation.

Rules with NativeMDXScript implementation must be saved as inactive in the model and then enabled by your PerformancePoint Planning Global Administrator. For more information, see Security requirements for SQL and MDX rules.

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Placeholder substitution requirements

To convert the InternalRateOfReturn template into a business rule, you must substitute actual dimension values for the placeholders in the templates. For information about how to substitute values, see Filling a placeholder in a rule template.

The following table describes the placeholder substitutions that you must make to create a business rule from this template.

Placeholder

Description

[Time].[Hierarchy].[ TargetTimeMember]

The time period in which the IRR result will be stored

[Time].[Hierarchy].[Starting Period]

The start of the time series of cash flows

[Time].[Hierarchy].[Ending Period]

The end of the time series of cash flows

[Account].[Hierarchy].[IRR Target Account]

User-defined member of the Account dimension that will store the calculated internal rate of return

[Account].[Hierarchy].[CASH FLOW Account]

The account that provides input cash flows to the calculation

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