Let’s assume that we didn’t calculate the IRR of 57% as we did above and have no idea what the correct discount rate is. We can use Excel’s What-If calculator in this case.

Next, in the IRR function, in the Values field, select the array of cells that contains the values of the payments and receipts for which you want to calculate the IRR. In our example, it is A1:A13.

1. Excel’s IRR function. Excel’s IRR function calculates the internal rate of return for a series of cash flows, assuming equal-size payment periods. Using the example data shown above, the IRR ...

Calculating the internal rate of return, or IRR, of an investment is a powerful tool for businesses. When a manager is faced with a capital intensive decision, IRR can quickly compare the ...