IRR monthly analysis

[Guest]

Analyzing periodic investment over 60 months with income from investment at
various times. IRR covering 60 monthly occurances is 10x different then when
I sum each year and look at 5 flows. Any way to analyze monthly impact versus
annual summary?

 

[Don]

David,

Take the cash flows below:

To calculate the monthly compound rate : =IRR(A1:A61,.04)*12 = 5.00%
To calculate the annual compound equivalent rate use :
=(1+(IRR(A1:A61,.04)))^12-1 = 5.116%
Or use the effect function =EFFECT(5%,12) = 5.116% after you do the first
IRR calculation.

Don Pistulka

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