Excel allows a user to get an internal rate of return of an investment with returns occurring at regular or irregular intervals. If we want to use regular intervals we should use the **IRR** function. If we want to calculate for irregular intervals, then we need the **XIRR** function. This step by step tutorial will assist all levels of Excel users in learning what is the difference between the IRR and XIRR functions in Excel.

*Figure 1. The result of the IRR, XIRR and MIRR functions*

**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%).

**Syntax of the XIRR Formula**

The generic formula for the XIRR function is:

**=XIRR (values, dates, [guess])**

The parameter of the XIRR 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**dates**– a range of dates corresponding to values. All dates must be in chronological order**[guess]**– an estimated value for the expected XIRR. 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 Functions**

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 column D (“Date”), we have dates. In In the cell G4, G5 and G6, we want to get the IRR, XIRR and MIRR respectively.

* Figure 2. Data that we will use in the examples*

**Get an 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 G4 and click on it
- Insert the formula:
`=IRR(B3:B10)`

- Press enter.

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

Finally, the result in the cell G4 is 8%, which is the internal rate of the investment using the IRR function.

**Get an XIRR of Values Using the XIRR Function**

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

The formula looks like:

**=XIRR(B3:B10, D3:D10)**

The parameter **values **is the range B3:B10 and the parameter **dates** is D3:D10.

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

- Select cell G5 and click on it
- Insert the formula:
`=XIRR(B3:B10, D3:D10)`

- Press enter.

*Figure 4. Using the XIRR function to get the internal rate of the investment*

Finally, the result in the cell G5 is 47%, which is the internal rate of the investment using the XIRR function.

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