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Issue with IRR Calculation

  1. #1
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    Issue with IRR Calculation

    Having an issue calculating the adjusted net IRR.

    I have attached a side by side comparison of adjusted versus unadjusted.

    The residual value of the investments is the only thing that changes. The adjusted value is ~$3MM more but for some reason, the IRR isn’t changing at all. Any ideas what is going on?
    Attached Files Attached Files

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    Re: Issue with IRR Calculation

    FRom others on this forum more knowledgeable than me, I have learned that Excel's XIRR() function has some numerical instabilities in it that cause it to return incorrect results in some cases. That 2.98E-9 result is one indication that the XIRR() calculation is not converging on the correct result. If I enter an optional "gues" to your XIRR() function =XIRR(current argument, currentargument,-.5), then I get the XIRR() functions to return -1.55% and -3.34% (I did this in Gnumeric and LO Calc -- I know I have seen Excel's XIRR() function be less stable than these other spreadsheets). From what I can tell, any time you get that 2.98E-9 result, that tells you that you need to supply a "guess" argument, until you find a suitable value that allows Excel's XIRR() to calculate the true rate of return.

    see discussion here: https://www.excelforum.com/excel-gen...ml#post4809641
    https://www.excelforum.com/excel-for...ml#post4831063

    See if that helps.
    Quote Originally Posted by shg
    Mathematics is the native language of the natural world. Just trying to become literate.

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