IRR formula

CKJackson

New Member
Joined
Feb 14, 2011
Messages
2
I am looking for help with the following:
Assume this example:
Internal Rate of Return
$-5,000, $2,000,$2,000,$2,000,$2,000,$2,000
using =IRR(above sequence) I get an IRR =29%
What I am hoping for is to use "Solver / or a formula" to achieve the following.
I would like to find out what % to be multiplied by the cells following the $-5,000 will yield an IRR of 25% - from trial and Error I got 93% yielding
$-5,000,$1860,$1860,$1860,$1860,$1860
Is there a way to automatically calculate this?
The application of this is to determine what % of a project would yeild a "Set %" return on equity for an Investor partner

Cheers

Chris
 

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cornflakegirl

Well-known Member
Joined
Nov 4, 2004
Messages
2,023
Welcome to the board.

It sounds like you want to discount your cashflows at the required percentage, and then force the NPV to 0.

You can use Goal Seek to set the result of your NPV calculation to 0 by changing your factor cell (ie the one that contains 93%).
 

shg

MrExcel MVP
Joined
May 7, 2008
Messages
21,770
Office Version
  1. 2010
Platform
  1. Windows
You could use =PMT(25%, 5, -5000, 0) which returns $1859.23
 

MickG

MrExcel MVP
Joined
Jan 9, 2008
Messages
14,841
If your "IRR" result is in "B1" and you place a 1 in "C1", then multiply each value apart from the first by "C1".
Then use "Sover" to Get the result in "B2 to 25% ( use 0.25 in solver)
By changing "C1" then you will get your Result.
Mick
 

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