Re: IRR

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> when I use the following CF stream, I get an error message (#NUM!).

Hi. For me, I find it easier to switch the point of reference.
Change the sign of all your numbers so that the first payment is an outflow (negative). Unless I am mistaken, you have a large negative return.
If you last payment is changed from -9000 to -2500, you will see a negative return of about -47% (Both from Excel, and a custom function)
When you start decreasing your value to -9000, the return goes to a very large negative number and causes an error.

= = =
HTH :>)
Dana DeLouis



gotahavit wrote:

"Ron Rosenfeld" wrote:

On Thu, 22 Jan 2009 14:21:01 -0800, gotahavit
<gotahavit@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote:

I have a question regarding IRR.
I am trying to figure out the IRR for an investment (actually, this has come up a number of times in the past). Unfortunately, it is not one of those simple cases where the initial investment is negative and all subsequent cash flows are positive. There are a couple of times when the cash flow signs switch. I understand the multiple IRR issue, but it still doesn't help that I cannot get a return number from Excel.
I have to imagine that these cases, where the negatives and positives switch more than once, is common. It is difficult to just say "well, there is no IRR". I still need to know what the rate of return would be. What can I do?
Please help.

Thanks.
Why do you think there is a requirement for Excel's IRR function that it must
be the case that "the initial investment is negative and all subsequent cash flows are positive." ??

What does "cannot get a return number from Excel" mean? Do you get a blank? Do
you get an Error message? If so, what is the message or error value?

HELP states that there must be at least one positive and one negative cash
flow; but I see no requirement there such as you write. And I've analyzed
numerous cash flows where the "signs switch".

Either you are using an inappropriate "guess", or there is something peculiar
about the values you are using. But without more specific information, it
would be difficult to advise you further.
--ron

I already replied to one of the other people who replied to my question, but when I use the following CF stream, I get an error message (#NUM!).
5000
-2400
3034
222
-5743
9000

I have had the same problem in the past with different CF numbers, so when I tried to look into it, I thought it was because of the multiple IRR issue that arises from switching signs.
Can you get IRR to work using these numbers?

Thanks.
.

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