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Can You Use Excel to Display a Negative IRR?

Excel allows a user to get a negative internal rate of return of an investment using the IRR function. This step by step tutorial will assist all levels of Excel users in displaying a negative IRR.

Figure 1. The result of the IRR function

Syntax of the IRR Formula

The generic formula for the IRR function is:

=IRR (values, [guess])

The parameter of the IRR function is:

  • values – a range of cells containing values, including initial investment and incomes. The investment must have a negative sign, as it is a cost
  • [guess] – an estimated value for the expected IRR. This parameter is non-mandatory. If it’s omitted, the function will take a default value of 0.1 (=10%).

Setting up Our Data for the IRR Function

Let’s look at the structure of the data we will use. In column B (“Amount”), we have values including initial investment and yearly incomes. In column C (“Description”) we have a description of every amount. In the cell E3, we want to get the IRR.

Figure 2. Data that we will use in the IRR example

Get a Negative IRR of Values Using the IRR Function

In our example, we want to get the IRR of the values in the range B3:B10. The result will be in the cell E3.

The formula looks like:

=IRR(B3:B10)

The parameter values is the range B3:B10.

To apply the IRR function, we need to follow these steps:

  • Select cell E3 and click on it
  • Insert the formula: =IRR(B3:B10)
  • Press enter.

Figure 3. Using the IRR function to get the negative internal rate of the investment

As you can see the investment is $10,000,000 and the total return is $7,000,000. Therefore, we have the difference of $3,000,000. Finally, the negative result in the cell E3 is 8%, which is the internal rate of the investment.

Most of the time, the problem you will need to solve will be more complex than a simple application of a formula or function. If you want to save hours of research and frustration, try our live Excelchat service! Our Excel Experts are available 24/7 to answer any Excel question you may have. We guarantee a connection within 30 seconds and a customized solution within 20 minutes.

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