IRR Google Sheets Function

What Is IRR Google Sheets Function?

IRR Google sheets function refers to the Internal Rate of Return. It is a default function in both Excel and Google sheets. It is used to calculate the financial investments and the rate of returns in the given data.

For example, consider the below table showing the cash flows in the years in the columns A and B, respectively.

Now, let us learn how to use the IRR Function to find the rate of return in Google sheets. To begin with, insert the data we want to find the IRR in Google sheets. In this example, the data is between A1:B6. Next, select the cell where we want to find the result. In this example it is cell B8. Now, insert the IRR function formula and select the cell range as the argument.

So, the formula is =IRR(B2:B6)

Press Enter key. We can see the result in cell B8 as shown in the below image.

Likewise, we can use IRR function to find the rate of return in Google sheets. In this article, let us learn and understand more about IRR function in Google sheets with detailed examples.

IRR() Google Sheets Formula

The formula or syntax of IRR function in Google sheets is

= IRR(cashflow_amounts,[rate_guess])

Where,\

• Cashflow_amounts is the only mandatory arguments that refers to the cell range showing cash flow data.
• Rate_guess is the optional argument which shows the estimate of the result.

How To Calculate IRR Google Sheets Function?

The steps to calculate the internal rate of return, IRR in Google sheets are:

Step 1: To begin with, insert the data we want to find the IRR in Google sheets.

Step 2: Next, select the cell where we want to find the result. Insert the IRR function formula and select the cell range as the argument.

Step 3: Press Enter key.

We will be able to see the result in the active cell.

For example, consider the below table showing the cash flows in the years in the columns A and B, respectively.

Now, let us learn how to use the IRR Function to find the rate of return in Google sheets.

The steps are:

Step 1: To begin with, insert the data we want to find the IRR in Google sheets. In this example, the data is between A1:B6.

Step 2: Next, select the cell where we want to find the result. In this example it is cell B8. Now, insert the IRR function formula and select the cell range as the argument.

So, the formula is =IRR(B2:B6)

Step 3: Press Enter key.

We can see the result in cell B8 as shown in the below image.

Likewise, we can use IRR function to find the rate of return in Google sheets.

Examples

Let us have a look at the following examples for better understanding.

Example #1

For example, consider the below table showing the cash flows in the years in the columns A and B, respectively.

Now, let us learn how to use the IRR Function to find the rate of return in Google sheets.

The steps are:

Step 1: To begin with, insert the data we want to find the IRR in Google sheets. In this example, the data is between A1:B6.

Step 2: Next, select the cell where we want to find the result. In this example it is cell B8. Now, insert the IRR function formula and select the cell range as the argument.

So, the formula is =IRR(B2:B6)

Step 3: Press Enter key.

We can see the result in cell B8 as shown in the below image.

Likewise, we can use IRR function to find the rate of return in Google sheets.

Example #2

For example, consider the below table showing the cash flows in the years in the columns A and B, respectively.

Now, let us learn how to use the IRR Function to find the rate of return in Google sheets.

The steps are:

Step 1: To begin with, insert the data we want to find the IRR in Google sheets. In this example, the data is between A1:B6.

Step 2: Next, select the cell where we want to find the result. In this example it is cell B8. Now, insert the IRR function formula and select the cell range as the argument.

So, the formula is =IRR(B2:B6)

Step 3: Press Enter key.

We can see the result in cell B8 as shown in the below image.

Likewise, we can use IRR function to find the rate of return in Google sheets.

Example #3

For example, consider the below table showing the cash flows in the years in the columns A and B, respectively.

Now, let us learn how to use the IRR Function to find the rate of return in Google sheets.

The steps are:

Step 1: To begin with, insert the data we want to find the IRR in Google sheets. In this example, the data is between A1:B6.

Step 2: Next, select the cell where we want to find the result. In this example it is cell B8. Now, insert the IRR function formula and select the cell range as the argument.

So, the formula is =IRR(B2:B6)

Step 3: Press Enter key.

We can see the result in cell B8 as shown in the below image.

Likewise, we can use IRR function to find the rate of return.

Difference Between The IRR And XIRR Functions In Google Sheets

• IRR function is the Internal Rate of Return. It is used to find the rate of return for a given data.
• The formula or syntax of IRR function is

= IRR(cashflow_amounts,[rate_guess]) where,

• The mandatory argument is the Cashflow_amounts showing the cell range with cash flow data.
  • The optional argument is the Rate_guess showing the estimate of the result.
• XIRR function is similar to IRR function but is used to find the internal rate of return in non-periodic cash flows.
• The formula or syntax of XIRR function in Google sheets is

= XIRR(cashflow_amounts,cashflow_dates,[rate_guess]) where,

• The mandatory argument is the Cashflow_amounts showing the cell range with cash flow data.
  • Another mandatory argument is the Cashflow_dates showing the cell range with dates, indicating when the cash flow happened in the data.
  • The optional argument is the Rate_guess showing the estimate of the result.

Importance Of IRR In Financial Analysis

• IRR shows the rate of return and users can find their IRR independently with just a few steps.
• Remember, the cash flow used to calculate IRR should be periodic.
• We will get an error while using IRR function if the data is not periodic.
• Therefore, in such situations where we have to find IRR in non-periodic cash flows, we can use XIRR function.

Important Things To Note

• Remember, we need to have a cash flow while using IRR function in Google sheets.
• We can use this function to know the profits and losses of our businesses using IRR function in Google sheets.
• Note that the IRR function is usually compared to find the rate of return with the company or business cost of capital.

Frequently Asked Questions

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