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how to use excel formula irr. For increased precision CFI recommends you use the XIRR function XIRR vs IRR Why use XIRR vs IRR. In the above formula the value1 would be the initial investment Period 0 with negative cash flow followed by cash flows from all other periods.
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Starting with guess IRR cycles through the calculation until the result is accurate within 000001 percent. The initial investment which would be negative cash flow. Microsoft Excel uses an iterative technique for calculating IRR.
You can use the IRR function in Excel to determine your Internal Rate of Return.
The IRR function below calculates the internal rate of return of project X. In any investment IRR. For more information please see the Excel IRR function. Select cell B8 and use the Excel function button labeled fx to create an IRR function for the first project.
