XIRR Calculator

XIRR Calculator: Find your investments’ exact rate of return with our free tool. Input cash flows & dates for precise IRR calculation today.

Using the XIRR Calculator

Extended IRR: Extended Internal Rate of Return XIRR calculator (XIRR) on the surface is prettier than simple IRR calculator. The working of it is as follows:

1. How much you are going to invest: in multiple currencies like USD, euros, or Swiss francs. Just the exact Date of investment please enter; DO not forget

2. Choose Cash Flow Events: Pick as many cash flow events are going to analyze. Enter up to 25 events.

3. Cash Flows Input: For each event, enter the amount of cash inflows and outflows as well as the date. Recall that you have to use negative numbers for outflows.

4. Calculate: After entering all the information, click on “Calculate”. The Extended Internal Rate of Return per year will also be displayed on the calculator, along with the Gross Return (percentage) and Net Cash Flow (Profit / Loss).

What is XIRR?

Extended Internal Rate Of Return (XIRR) is the discount rate at which the Net Present Worth (NPW) of all cash flows for a project are equal over time. Unlike standard IRR, XIRR is not periodic/even cashflows. XIRR is designed with enough flexibility to be used in unevenly spaced investments and returns. As for the “Internal,” meaning that XIRR ignores external variables such as capital charge or inflation.

XIRR (Extended Internal Rate of Return) is a easy tool that can be used to analyze the profitability of prospective investments, especially when the investments have lumpy cash flows. At certain times, returns might not be following a cycle of monthly, quarterly, or annually, which makes the non-periodic cash flows less efficient than standard IRR models. The higher the return of an investment, the more it shines, and the lower the rate increases risk in the aggregate, making it less appealing. XIRR can help the investors to select among mutual funds (or any other investments) by comparing them, in spite of any fluctuations w.r.t. timing and amounts of multiple investments with different return rates that are commonly referred to as floating return rates.

On CAGR versus XIRR, it should be noted here that XIRR gives a higher priority to earlier cash flows as compared to the later ones. Investors may lean towards this preference of valuing $100 today over $100 invested to be received one year from now, naturally. Look into time value money for more to the point of what I am saying.

XIRR formula

You cannot directly calculate EIRR, either by doing it yourself or using an Excel spreadsheet, as even there is no EIRR formula. The clean way of calculating EIRR is either by programming or one of our online EIRR-calculator as seen above. This is a methodology that solves the NPV formula and stands where we put ‘the left side of the equation must be exactly equal with zero.

In this text, we discuss important terms related to cash flow and investment.

• “r” is used to represent the discount or interest rate
• The total number of cash flow periods is designated by “T,” & for each, “t” is a time within those periods.
  “Initial Investment”: “C0”, Amount returned during cash flow event “t”: “Ct”
• “DT” is the date of the cash flow event in days from a base date and the date on which we make the initial investment of “d0”.

We need to use an iterative method to get the interest rate “r” when the Net Present Value (NPV) is zero because there is no simple formula. That is why our XIRR calculator runs the searches iteratively until it gets an “r” that makes NPV practically zero (the definition of XIRR).

 Extended Internal Rate of Return calculation example

Let me give you an example: An investment needs an initial outflow of $10,000 and returns $25K in 5 years with a cash flow of $3,000 at 2nd year-end on $3,000 delayed by a year for the third year, then the rush of $4,000s only to hit a slight slump in y4 with then an upswing of $10K and finally your biggest paying client comes through at the end of the third quarter of year five with another order. How to calculate the internal rate of return CIA TERMS?

If you want to derive the discount rate, which gives you a net present value (NPV) of zero, you need an XIRR calculation. One way of solving this problem is graphing that relates the NPV with the discount rate and looks at where NPV changes from positive to negative. However, this approach gets monotony since you have to calculate NPV for different discount rates.

Likewise, a computer algorithm may be used to simplify the process of running numerous discount rates until it gets an NPV near zero instead of manually calculating. In reality, this comes out to a discount rate of 30.52%.

XIRR vs. IRR

Internal Rate of Return (IRR): This is an easy way of figuring returns good for changing inflows and outflows (as long they happen at regular intervals — that is, annually, quarterly, or monthly). An Extended Internal Rate of Return (XIRR) is used to calculate the rate of return for a particular investment in which there is an unequal amount invested over varying periods. The XIRR has the advantage that it is not limited to the exact periodicity in the case of non-periodic cash flows but also Has a special XIRR over IRR. If you want to read more on these return on investment metrics, there is a separate post comparing CAGR, IRR, and XIRR in detail.  

Financial caution

The following estimator will help you to do a back of the envelope calculation for getting the IRR on investments that do not have regular cash flows. This is one of the tools for which it is important to understand that this is not an end-all-be-all in decision-making. Remember to consult a licensed financial professional before making large financial decisions and entering into enforceable commitments (e.g., bank deposits). With the information generated by this software, you are doing so at your sole risk.