Type in the second year's cash flow, 200, and hit [Enter]. Payments are expressed as negative values and income as positive values. Note that, in the above example, the initial investment is a negative value, as this is an outgoing payment, and the income payments are represented by positive values. Step 3: These cash flows do not have to be even, as they would be for an annuity. Note this is a different format than the input in the BAII calculator.

## Calculating Internal Rate of Return Using Excel or a Financial Calculator

Skip to main content. The "IRR" function in Excel will only work if you have at least 1 positive and 1 negative entry per project. The IRR function requires that you include all the cash flows, including the cost to acquire for year 0. Prepare your spreadsheet by creating the column labels.

Expand your Office skills. Values must contain at least one positive value and one negative value to calculate the internal rate of return. In the "Values" field of the Excel function window, click and drag to highlight the cells from B2 to B7. This measurement uses a series of cash flows an initial investment, along with the net income over a number of periods, to calculate the compounded return, assuming the Net Present Value of the investment is zero.

## Excel IRR Function

Each month, more than 1 million visitors in 223 countries across the globe turn to InvestingAnswers. InvestingAnswers, Inc. Highlight the project with the highest IRR percentage rate. The first value is negative, since it represents an outflow.

Simple Savings Calculator: Consider the following example to walk through the process of using Excel for capital budgeting problems: Cookies make wikiHow better.

Keep in mind this initial investment has to be a negative number. If guess is omitted, it is assumed to be 0.