difference between excel irr & xirr function

Hi, I have used IRR function to calculate the IRR of a series of cash flows, this gives 4%. But using the XIRR function on the same set of dates and values/cashflows gives a #NUM! result? Whi is this?

Hi, thanks for the tips, so with an IRR function, would this still calculate even if for one year after the initial month 1period of a negative cashflow, there a couple of months of zero '0' cashflows before positive cashflows start to be earned?

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[I misread some details of your posting.]

Originally Posted by Jonno1

Hi, I have used IRR function to calculate the IRR of a series of cash flows, this gives 4%. But using the XIRR function on the same set of dates and values/cashflows gives a #NUM! result? Whi is this?

It would help if you provided a concrete example. No one knowledgable can offer a dispositive answer based on such a vague description. We can only take potshots and wild guesses.

Originally Posted by Jonno1

with an IRR function, would this still calculate even if for one year after the initial month 1period of a negative cashflow, there a couple of months of zero '0' cashflows before positive cashflows start to be earned?

Yes. And you say you do not have a problem with the Excel IRR function.

IRR assumes that the frequency (unit of time) of each value is equal. The Excel IRR returns an IRR per unit of time (e.g. monthly).

XIRR requires the date associated with each value. XIRR returns an annual rate compounded daily.

So the XIRR rate will be very different from the Excel IRR rate unless all of the data are annual. (Even then, there will be some difference.)

Finally, the XIRR algorithm seems to be more sensitive to the rate of change (slope) of the NPV curve. Consequently, it seems to require the "guess" parameter more often. And even then, sometimes it does not help.

Beyond these broad strokes, it is difficult to offer a "good" answer without a concrete example.