irr (Financial Toolbox)

Internal rate of return

Syntax

```
Return = irr(CashFlow)
```

Description

Return = irr(CashFlow) calculates the internal rate of return for a series of periodic cash flows. CashFlow is the cash flow vector. The first entry in CashFlow is the initial investment. If the cash flow payments are monthly, multiply the resulting rate of return by 12 for the annual rate of return. This function calculates only positive rates of return; for negative rates of return, Return = NaN.

Examples

This cash flow represents the yearly income from an initial investment of $100,000:

Year 1
$10,000

Year 2
$20,000

Year 3
$30,000

Year 4
$40,000

Year 5
$50,000

Year 1	$10,000
Year 2	$20,000
Year 3	$30,000
Year 4	$40,000
Year 5	$50,000

To calculate the internal rate of return on the investment

Return = irr([-100000  10000  20000  30000  40000  50000])

returns

```
Return =

         0.1201 (12.01%)
```

See Also

effrr, mirr, nomrr, taxedrr, xirr

References

Brealey and Myers, Principles of Corporate Finance, Chapter 5

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