In my case, I think:

Numbers say more than words.

So, I've simplified the financial situation in this image: enter image description here Here is the Excel file.

How to calculate the Internal Rate of Return (IRR) with such a data? I know Excel has the IRR function, but what financial statement values should I use as IRR function parameters for the calculation?

  • 1
    IRR just works on cash flows in and out of your interest bearing account (or investment), with opening & closing balances treated as cash flows. In your spreadsheet it is not clear what your basic, actual cash flows are. If you could separate them from all the other data that would make the task clearer. – Chris Degnen Jul 26 '20 at 8:32
  • Make a row with the sum of the initial investments and the net profit each year. Calculate the IRR for that row. – Omer Jul 26 '20 at 11:40
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    I've reopened, but it might still be closed as off-topic for other reasons, given it seems to be about accounting for a company: money.stackexchange.com/help/on-topic - it'd help if you explained what you are trying to do in more detail. – GS - Apologise to Monica Jul 26 '20 at 14:33
  • The initial investment is in the first table while the cash flows (at the end of each year) are in the fourth table. The issue is: which cash flow line-items should I use to calculate the IRR? – Backo Jul 26 '20 at 22:01
  • Who is making the investment? Are they somehow getting cash from their investment? How? – Chris W. Rea Jul 27 '20 at 2:25

Cash in (with interest accrued) balanced against cash at end of year 10

1750000 (1 + r)^9 + 1750000 (1 + r)^8 = 247733109

∴ r = 0.644646

enter image description here

  • 1
    This isn't wrong -- you've clearly stated in your assumptions as dealing with just the cash amounts -- but I'll point out that with those assumptions, everything else on the balance sheet is assumed to have zero value. If non-cash assets do have the stated book value (or any liquidation value exceeding the liabilities) then IRR is understated to the extent that liquidated net worth at the end of year 10 exceeds the cash at end of year 10. Admittedly, meaningful IRR really depends on what the OP was going after. Sometimes the cash flows are what matters. – Chris W. Rea Jul 28 '20 at 0:00

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