XIrr(values, dates, I)
Computes the internal rate of return (IRR) for a non-periodic cash flow, i.e., where each payment made or received occurs on an arbitrary date, rather than at periodic intervals. The «values» parameter contains an array of cash flow values, indexed by «I», with positive values indicating inflows (payments received) and negative values indicating outflows (payments made). The «dates» parameter is an array of dates, indexed by «I», containing the date at which each corresponding cash flow event occurs. Each date is represented as the number of days since Analytica's date origin (usually Jan 1, 1904).
Internal rate of return is a metric commonly used to compare investment alternatives. As a measure for comparing project or investment opportunities, it can often be misleading and is widely considered by textbooks and academics as an inferior measure to net-present value Npv for such comparisons; however, internal rate of return is the more commonly used metric by managers in corporations. Internal rate of return is explained further on the Irr page.
A treasury note with a coupon rate of 5.5% is being offered on the second-hand market for $102.32 on 10 Nov 2008. The note matures on 15 May 2009, and its next coupon payment occurs on 15 Nov 2008. Calculate its yield-to-maturity.
If we purchase this on 10 Nov 2008, our cash flow for this note is given by the following schedule:
cfDate cfAmount 10 Nov 2008 -$102.32 15 Nov 2008 $2.75 15 May 2009 $102.75
The yield to maturity is given by:
XIrr(cfAmount, cfDate, cfDate) → 6.36%