IRR Function

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


IRR( values () [, guess ] )

The IRR function syntax has these arguments:



values ()

Required. Array of Double specifying cash flow values. The array must contain at least one negative value (a payment) and one positive value (a receipt).


Optional. Variant specifying value you estimate will be returned by IRR. If omitted, guess is 0.1 (10 percent).


The internal rate of return is the interest rate received for an investment consisting of payments and receipts that occur at regular intervals.

The IRR function uses the order of values within the array to interpret the order of payments and receipts. Be sure to enter your payment and receipt values in the correct sequence. The cash flow for each period doesn't have to be fixed, as it is for an annuity.

IRR is calculated by iteration. Starting with the value of guess, IRR cycles through the calculation until the result is accurate to within 0.00001 percent. If IRR can't find a result after 20 tries, it fails.


Note: Examples that follow demonstrate the use of this function in a Visual Basic for Applications (VBA) module. For more information about working with VBA, select Developer Reference in the drop-down list next to Search and enter one or more terms in the search box.

In this example, the IRR function returns the internal rate of return for a series of 5 cash flows contained in the array Values(). The first array element is a negative cash flow representing business start-up costs. The remaining 4 cash flows represent positive cash flows for the subsequent 4 years. Guess is the estimated internal rate of return.

Dim Guess, Fmt, RetRate, Msg
Static Values(5) As Double ' Set up array.
Guess = .1 ' Guess starts at 10 percent.
Fmt = "#0.00" ' Define percentage format.
Values(0) = -70000 ' Business start-up costs.
' Positive cash flows reflecting income for
' four successive years.
Values(1) = 22000 : Values(2) = 25000
Values(3) = 28000 : Values(4) = 31000
' Calculate internal rate.
RetRate = IRR(Values(), Guess) * 100
Msg = "The internal rate of return for these " & _
"five cash flows is "
Msg = Msg & Format(RetRate, Fmt) & " percent."
MsgBox Msg ' Display internal return rate.
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