Re: IRR formula - Please help me

[thomask@cpcug.org (Keith Thomas)]

Maurizio Incani (maurizio.incani@pixie.co.za) wrote:
: I need to implemet the IRR formula (and calculation) into
: a system under development.
: I don't have a clue on what is (or looks like) the IRR.

Any half-reasonable economics text book should have a description of this.
Provided your costs and benefits do not have large variations, you will
normally get only one answer - although if there are large variations you
may get more than one answer. This is stretching my memory a bit as it is
a few years since I have dealt with IRR, but I seem to remember that under
particular conditions there may not be a real (non-imaginary) answer. It
is often calculated by iterative methods. 

The definition from my old 'Engineering Economy' text book is:

"the interest rate at which the present worth of the cash inflow equals 
the present worth of the cash outflow (the customary use of present 
worth amounts to determine the IRR could just as well be annual worths or 
future worths)"

KT