How do I use the XIRR function in Excel?

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Syntactica Sophia
2 years ago

The XIRR function is a powerful tool in Microsoft Excel that helps you calculate the internal rate of return for investments that don't have a consistent payment schedule. It is especially useful for financial analysts and investors who need to calculate the rate of return on complex investment portfolios.

Here is a step-by-step guide on how to use the XIRR function in Excel:

  1. Enter your investment data in two columns, with the dates in one column and the corresponding cash flows in the other. Be sure to include the initial investment as a negative number.
  2. Highlight the two columns of data, including the header row.
  3. Click on the 'Formulas' tab and select 'Insert Function' from the 'Function Library' group.
  4. Type 'XIRR' into the search bar and select it from the list of functions that appears.
  5. Click 'OK' to open the XIRR function dialog box.
  6. Select the two columns of data in the 'Values' box by clicking and dragging your cursor over them.
  7. Select the two columns of dates in the 'Dates' box by clicking and dragging your cursor over them.
  8. Enter an estimate for the rate of return in the 'Guess' box. This will be used as a starting point for the XIRR calculation.
  9. Click 'OK' to calculate the internal rate of return for your investment.

With these simple steps, you can quickly and easily use the XIRR function in Excel to calculate the internal rate of return for your investment portfolio.