Calculating IRR(internal rate of return)

Question

Can anyone tell me how to calculate IRR for a series of cash flow manually.

Please don't tell to use a calculator or a calculator software. I want to do it by hand.

Answer 1

Here is the formula to calculate IRR e.g. EMI on consumer loan.

Open excel. on the top cell in a row write loan amount. thereafter fill up every cell below with EMI figure with minus sign since it is a outgo. In the top figure deduct all processing charges, documentation, advance EMI etc.

Now come to the end of the row where the last EMI is mentioned.

In the next row cell give the formula IRR(beginning cell..last cell, 0.05)

Give return and you will get the IRR. convert the cell to percentage or multiply by twelve as the case may be.

Answer 2

Exhaustive answer mr. prashant.