Excel IRR function
Calculates the internal rate of return: the rate at which net present value is zero. In Spanish Excel it is called TIR.
Syntax
English Excel
=IRR(values, [guess])
Spanish Excel (Mexico)
=TIR(valores, [estimar])
Spanish Excel (Spain, Latin America)
=TIR(valores; [estimar])
| Argument | What it is |
|---|---|
| values | The cash flows, starting with the investment as a negative. |
| guessoptional | A starting rate; 10% if omitted. |
Example
IRR(cash flows) is the rate at which net present value is 0: the project’s return. Here the initial investment does go inside the range. If the IRR beats the rate you require, the project is worth it.
=IRR(B4:B8)
Common mistake
It needs at least one negative and one positive flow; otherwise it returns #NUM!.
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Practice IRR
Type the formula in the sheet and check it instantly. Spanish or English function names both work. See all lessons
Return with IRR
IRR(cash flows) is the rate at which net present value is 0: the project’s return. Here the initial investment does go inside the range. If the IRR beats the rate you require, the project is worth it.
In B10, calculate the internal rate of return of the cash flows for years 0 to 4.
| A | B | C | |
|---|---|---|---|
| 1 | Required rate | 12% | |
| 2 | |||
| 3 | Year | Cash flow | |
| 4 | 0 | -80,000.00 | |
| 5 | 1 | 22,000.00 | |
| 6 | 2 | 26,000.00 | |
| 7 | 3 | 30,000.00 | |
| 8 | 4 | 28,000.00 | |
| 9 | |||
| 10 | IRR | ||
| 11 | Worth it? | ||
| 12 |
Tip: while typing, click a cell or drag across several to insert their reference. F4 anchors the reference with $.
Frequently asked questions
- What is IRR called in Spanish?
- In Spanish Excel it is TIR. The formula =IRR(B4:B8) is written =TIR(B4:B8) (or with commas in Mexico).
- Why does IRR use semicolons in some Excel versions?
- It depends on regional settings. Where the comma is the decimal mark (Spain, much of South America), Excel separates arguments with semicolons. English Excel and Mexican Spanish Excel use commas.
- What is the most common IRR mistake?
- It needs at least one negative and one positive flow; otherwise it returns #NUM!.