How to Find Internal Rate of Return (IRR)
The TI-83 Plus and TI-84 Plus Calculators have a built-in function to find Internal Rate of Return (IRR) of a financial investment. Let’s work through an example.
Example: Find the internal rate of return (IRR) on an investment that costs $135,000. In year 2, it returns $50,000. In year 3, it returns $40,000. In year 4, it returns $30,000. In year 5, it returns $50,000.
To solve the problem for IRR:
- Press [2nd][FINANCE]. Choose 8:irr(.
- For this problem, enter irr(-135000, {50000, 40000, 30000}, {2, 1, 1,}).
- Press [ENTER] to calculate the IRR. You should get an IRR of 10.07%
September 30th, 2008 at 11:11 am
TI-84 steps are a little different than using TI-83: To find IRR with TI-84:
Use these entries irr(-135000,{50000,40000,30000,50000},{1,1,1,1}) = 10.07063094
October 27th, 2008 at 6:20 pm
Given the cash inflows are 50,000 in the first 2 yrs, why does the 50000 come after 30000 in {50000,40000,30000,50000} component of the function?
Shouldn’t it be irr(-135000,{50000,50000,40000,30000},{1,1,1,1}) instead?
> This function yields an IRR of 10.86% instead of 10.07%
October 28th, 2008 at 9:56 pm
I use your exact notation and my answer is 10.86%
October 29th, 2008 at 9:32 am
how do you put in the commas and stuff? using a ti 83 plus. thanks.
October 29th, 2008 at 9:35 am
nm i figured it out…but what do the {2, 1, 1,}). represent?
March 10th, 2009 at 9:59 am
the 2,1,1 represent the number of CONSECUTIVE payments for that ammount indicating that 50 000 is returned in each of the first two years. Obviously incorrect.
the function as my prof explained it should be -135000,{50000,40000,30000,50000}
yeilding 10.07 % Sandras steps for entry are correct. When all of the payment’s are applied only once consecutivley you do not need to enter in the second series as 1 is the default.
The initial notation for the TI84 would yeild 10.86 not 10.07 as the poster stated.
April 27th, 2009 at 3:12 pm
can anyone tell me how to figure out IRR on a TI 82 plz?
June 16th, 2009 at 3:07 pm
Thank you a bunch… this really helped me out.. i didn’t have a clue
August 3rd, 2009 at 9:47 pm
If we were to graph this on a line it may give it more sense (Following the the example and answer your professor provided) :
AMT 0 50000 40000 30000 50000
YR 1 2 3 4 5
The first year yeilded $50,000 the 2nd yr. yeilded $50, 000, the 3rd yr. yielded $40,000.
IRR{-135000,{50000,40000,30000,50000}, {1,1,1,1} =10.07063 or 10.07 %
Resham example:
AMT 50000 50000 40000 30000
YR 1 2 3 4
irr(-135000,{50000,50000,40000,30000},{2,1,1}) =10.86%
I hope this helps.
August 30th, 2009 at 10:23 pm
Finance Calculations on TI-84
Internal Rate of Return:
irr ( initial cost , cashflow list )
Example: initial outlay on a piece if equipment was $200,000. Over the next 3 years, it generates $50k, $100k, and $150k respectively. The market rate of return is 10%.
Therefore, enter the cashflow generated into a List;
[STAT] > 1:Edit… > Enter the cashflows into the list L1
L1 =
50000
100000
150000
You can plug in L1 into the calculator by pressing…
[2ND] > [STAT] (list) > 1:L1
Your IRR calc should look like this:
= irr ( -200000 , L1 )
= 19.44%
September 20th, 2009 at 1:47 pm
PV calculations for NPV and IRR are easier for me if I use STAT EDIT and enter the cash flows under L1. This eliminates all the commas and other brackets it also reduces the chance for error.
For example.. you could list payments of 50k at the end of year 1, 40K at the end of year 2, 30K at the end of year 3, 50K at the end of year 4 under L1. After cash flows are entered quit out and get back in to apps finance IRR then enter… IRR(-135000,L1) to get 10.07%.
L2 can also be used for cash flow frequency.
December 9th, 2009 at 11:08 pm
Thanks guys I have a finance final tomo and need to know how to do this
February 11th, 2010 at 1:03 pm
I have a TI-83. “Press [2nd][FINANCE]” I can not find the word “Finance” in my calculator. Can someone please help me out! Thanks!
March 4th, 2010 at 10:22 am
hit Apps (purple button) –> 1. Finance, dunno why that guy said 2nd finance.
March 10th, 2010 at 9:22 am
I followed the instruction on the top. 135000 investment….. and I get an err: syntax. What am I doing wrong?
April 11th, 2010 at 6:54 pm
i’m sorry I’m a little confused on your explanation at the end of the equation that you input into your calculator. where do the 2 1 1 come from?
April 14th, 2010 at 3:22 pm
To my understandings
IRR(-135000,{50000,40000,30000,50000}, {1,1,1,1}) =10.07063
is the same as:
IRR(-135000,{50000,40000,30000}, {2,1,1,1}) =10.07063
and the same as:
IRR(-135000,{50000,40000,30000,50000}) =10.07063
June 1st, 2010 at 11:07 pm
Thanks peter. I’m using the ti84 plus and yur 3rd one is perfect for me.
IRR(-135000,{50000,40000,30000,50000}) = 10.07063
what does the {1,1,1,1} represent in this problem?
November 2nd, 2010 at 6:18 pm
Hello everyone,
What about this exercise?
Hathaway, Inc., a resort company, is refurbishing one of its hotels at a cost of $5,686,971. The firm expects that this improvement will lead to additional cash flows of $1,773,767 for the next six years. The IRR of this project is _____ %. If the appropriate cost of capital is 12 percent, the firm should Accept or Decline the project.
November 3rd, 2010 at 2:24 pm
how do I calculate NPV given IRR. Here is the original problem, initial outlay is 10,000 and the inflow is 3,500 for 4yrs, interest rate of 10%. I calculated the NPV using TI-84 plus as: NPV(10,0,{3500},{4})enter=11,094. then i minus the initial capital 10,000 to get NPV (11,094-10,000)=1,094.
The the IRR, calculated (-10,000,{3500},{4})enter = 14.96%.
Now my question is, if I am given the IRR of 14.96%, I=10, how do I calculate the NPV?
thanks Emmanuel
November 3rd, 2010 at 2:34 pm
Hi Rick,
to calculate the IRR via TI-84plus
App, choose option 8
Irr(-5686971,{1773767},{6}) enter = 21.489 = 21.49%
If IRR > k accept
If IRR 12% accept project.
November 3rd, 2010 at 2:40 pm
cont……
if IRR K
21.49% > 12% Accept project
November 8th, 2010 at 1:55 pm
Hello Everyone,
Thank you very much for your previous responses, please help me out with the following, I’ve been doing it and is not giving me the right answer:
Internal rate of return: Compute the IRR for the following project cash flows.
(Round your answer to 2 decimal places. All intermittent calculations should be rounded to 4 decimal places before carrying to next calculation.)
a. An initial outlay of $3,881,402 followed by annual cash flows of $679,785 for the next eight years.____ %
b. An initial investment of $28,680 followed by annual cash flows of $8,041 for the next five years ____ %
c. An initial outlay of $11,329 followed by annual cash flows of $2,688 for the next seven years ____ %
Thank you in advance,
April 21st, 2011 at 7:59 pm
how do i input two cash outflows for a project on t-84 to derive the irr? For example
yr 1 -30000
yr 2 5000
yr 3 6000
yr 4 6500
yr 5 -4000
September 13th, 2011 at 4:52 am
I tried all irr formulas on my ti-84 plus silver edition and got error each time
Can somebody help please
Thanks
December 16th, 2011 at 1:05 pm
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