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%