Irregular deposits plus interest
Frank Shann
occasional deposits plus compound interest (calculated daily or monthly,
paid daily or monthly). It would give a printout exactly equivalent to a
bank statement. For example, with 10% interest, what is the balance on 1
Mar 2003 after deposits of: $40 on Jan 1st 2002, $6 on Mar 23 2002, $18 on
May 7 2002, $12 on Sep 10 2002, and $12 on Feb 18 2003?
Many programmes deal with an initial lump sum plus regular monthly
contributions, but few seem to handle irregular contributions. Mathwiz
Calculator will do the calculation by month (which is probably close
enough), but neither the input nor the results can be saved. Can anyone
supply a spreadsheet, please?
Don Guillett
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. All succeeding
payments are discounted based on a 365-day year.
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.
Guess is a number that you guess is close to the result of XIRR.
Remarks
· Numbers in dates are truncated to integers.
· XIRR expects at least one positive cash flow and one negative cash flow;
otherwise, XIRR returns the #NUM! error value.
· If any number in dates is not a valid date, XIRR returns the #NUM! error
value.
· If any number in dates precedes the starting date, XIRR returns the #NUM!
error value.
· If values and dates contain a different number of values, XIRR returns the
#NUM! error value.
· In most cases you do not need to provide guess for the XIRR calculation.
If omitted, guess is assumed to be 0.1 (10 percent).
· XIRR is closely related to XNPV, the net present value function. The rate
of return calculated by XIRR is the interest rate corresponding to XNPV = 0.
· Microsoft Excel uses an iterative technique for calculating XIRR. Using a
changing rate (starting with guess), XIRR cycles through the calculation
until the result is accurate within 0.000001 percent. If XIRR can't find a
result that works after 100 tries, the #NUM! error value is returned. The
rate is changed until:
where:
di = the ith, or last, payment date.
d1 = the 0th payment date.
Pi = the ith, or last, payment.
Example
Consider an investment that requires a $10,000 cash payment on January 1,
1992, and returns $2,750 on March 1, 1992, $4,250 on October 30, 1992,
$3,250 on February 15, 1993, and $2,750 on April 1, 1993. The internal rate
of return (in the 1900 date system) is:
XIRR({-10000,2750,4250,3250,2750},
{"1/1/92","3/1/92","10/30/92","2/15/93","4/1/93"},0.1) equals 0.373363 or
37.3363 percent
--
Don Guillett
SalesAid Software
Granite Shoals, TX
don...@281.com
Frank Shann <sha...@cryptic.rch.unimelb.edu.au> wrote in message
news:a3ckjt$g2b$1...@ariel.ucs.unimelb.edu.au...
Jay Petrulis
To add a bit to Don's message, XIRR assumes that the re-
investment rate is equal to the rate of return from the
project/investment. Be careful if that is not the case
with your data. The Excel Analysis ToolPak has a built-in
function to handle this (MIRR), but it works as does IRR --
regular cashflow intervals.
David Hager has developed a custom function that performs
an MIRR function with irregular intervals. He calls it
XMIRR (appropriate for sure), and it can be found in his
Excel Expert's newsletter #17. If you don't want the UDF,
he has also shown a monster array formula which does the
same thing.
You can view it from John Walkenbach's website...
http://www.j-walk.com/ss/excel/eee/eee017.txt
Bye,
Jay
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