Internal Rate of Return (IRR, XIRR, NPV)

[The Fjonk]

Hi all,

Any help on this would be very appreciated, i guess this is not the most challanging quistion for some of you but I'm lost :-)
I am trying to calculate the IRR for a set of CFs but I am apparently doing something wrong. I am looking at a Private Equity investment where there have been both Draw downs and Capital distributions, (so there are both positive and negative CFs). I also have the dates when these CFs occured but using the =XIRR formula I get an extremly small number which does not at all looks like its peers IRR. Using the =IRR formula I just get an error.

What steps have i missed out? As a Private Equity investment, there will be a inflow of funds for a period of time, compared to a one-off investment that produces CFs.
Can I use the =NPV formula, and the use Solver to get the IRR? What should then be the target NPV in the Solver tool?



05/03/2007 1070000
20/03/2007 300000
17/08/2007 350000
21/09/2007 500000
20/11/2007 450000
27/03/2008 350000
23/06/2008 250000
04/09/2008 700000
25/09/2008 500000
15/07/2009 300000
2009-11,24 150000
06/04/2010 200000
21/05/2010 350000
09/07/2010 350000
23/09/2010 400000
08/12/2010 -33650.73
09/12/2010 250000
16/02/2011 250000
13/06/2011 76240.03
28/06/2011 200000
21/07/2011 300000
06/10/2011 -200000
06/10/2011 -1645.03
26/01/2012 300000
26/01/2012 -7028.4
27/02/2012 400000

[ben_hensel]

Well, just off-hand, IRR("array", "guess") uses iteration w/ 20 steps from the "guess" value. If it's omitted, then it assumes it's 0.1 (10%).

Anyway, if it can't reach a precise answer (like 1/10,000th of a percent) in 20 steps, it throws the #NUM! error.

If that's the error you're getting, then the first thing I'd recommend is trying different guess values.

[MoneyMaker]

Your first cash flow of 1,070,000 are you sure this is suppose to be +ve cash flow rather than a -ve cash flow?

--EDIT--

Sorry to have misread your question

But it seems the outgoing cash flows of $(242,324.16) are rather minute as compared to the incoming cash flows of $7,996,240.03

[MoneyMaker]

You can try setting XNPV to zero and solve for the discount rate in Solver