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Saturday, 5 March 2011

XIRR is easy to use

Read? Measure, Measure, Measure (5)

As investors, we should be very concern on Rate of Returns on our investment, and Microsoft Excel function XIRR may be the right tool for us to track and monitor our investment performance.

How to use XIRR?

XIRR(values,dates,guess)

Values is a series of cash flows that corresponds to a schedule of payments in dates. The first payment is optional and corresponds to a cost or payment that occurs at the beginning of the investment. If the first value is a cost or payment, it must be a negative value. All succeeding payments are discounted based on a 365-day year. The series of values must contain at least one positive and one negative value.

Dates is a schedule of payment dates that corresponds to the cash flow payments. The first payment date indicates the beginning of the schedule of payments. All other dates must be later than this date, but they may occur in any order. Dates should be entered by using the DATE function, or as results of other formulas or functions. For example, use DATE(2008,5,23) for the 23rd day of May, 2008. Problems can occur if dates are entered as text.

Guess is a number that you guess is close to the result of XIRR. (Createwealth8888: you can ignore "Guess")

Read? What is IRR and XIRR and how to Calculate it

1 comment:

  1. Thanks for the simple explanation on XIRR.
    Its a great help!

    ReplyDelete

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