What does the Xirr function do in Excel?

The XIRR function is categorized under Excel financial functions. It will calculate the Internal Rate of Return (IRR) for a series of cash flows that may not be periodic. It does this by assigning specific dates to each individual cash flow.

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What is the difference between IRR and Xirr in Excel?

The main difference between Excel XIRR and IRR functions is this: IRR assumes that all the periods in a series of cash flows are equal. You use this function to find the internal rate of return for periodic cash flows such as monthly, quarterly or annual. XIRR allows you to assign a date to each individual cash flow.

What does Xirr mean?

Extended Internal Rate of Return
Full form of XIRR is Extended Internal Rate of Return.

What is a good Xirr rate?

What is a Good XIRR in Mutual Funds? It’s difficult to determine what one would call a good XIRR, but usually, an XIRR of 12% on an equity mutual fund for an investment period of 10 years could be good enough. Similarly, XIRR above 8% should be decent enough for debt mutual funds.

Is Xirr better than IRR?

IRR doesn’t take into account when the actual cash flow takes place, so it rolls them up into annual periods. By contrast, the XIRR formula considers the dates when the cash flow actually happens. Because of this, XIRR is a more accurate way to evaluate an investment.

Is Xirr a good measure?

It is not a very useful metric since it doesn’t tell you the rate of growth since time is not of importance while calculating absolute return. CAGR gives the annual rate of growth of a lumpsum investment.

Is Xirr same as compound interest?

If you make multiple investments in a fund, you can use the XIRR formula to calculate your overall CAGR for all those investments taken together….

Particulars	CAGR	XIRR
Description	It is a measure of the compound rate of growth	It is the average rate earned by each and every cash flow invested during the period

Is Xirr and compound interest same?

What it translates into is that each amount compounds for a different period. Extended Internal Rate of Return (XIRR) takes this into account. In XIRR, the CAGR of each installment is calculated, and then they are added together to give you the overall Compounded Annual Growth Rate.

Is Xirr same as interest rate?

The difference is due to the fact that XIRR returns an effective interest rate (i.e. compounded annually) which provides a mechanism for reliable comparison of interest rates. Whereas the 7.5% figure I provided is a nominal interest rate.

Is Xirr simple or compound interest?

While XIRR follows an annual compounding convention, the compounding duration is captured within the exponent (i.e. “#days/365”) as any fraction of a year, enabling the compounding calculation at any given day. Daily compounding results in a higher effective rate compared to an annual compounding 1.

Is Xirr same as annualized?

XIRR is the average rate earned by every cash flow during the period. While CAGR is the compounded annual growth rate. XIRR considers irregular cash flows.

How do you read Xirr?

The Extended Internal Rate of Return (XIRR) is a single rate of return that, when applied to each instalment (and any redemptions), yields the current value of the entire investment. XIRR stands for the individual rate of return. It’s your real investment return.

Is Xirr annualized return?

XIRR is a method used to calculate returns on investments where there are multiple transactions happening at different times….

Particulars	CAGR	XIRR
Multiple cash flows	It does not consider the multiple cash flows	Yes, it is considered
Absolute / Annualized measure	Absolute return	Only annualized

Is higher Xirr better?

So, when there is a series of investments being made over time, including transactions such as withdrawals, dividends, switch, etc. the better way to calculate the return is with XIRR. XIRR works much better for calculating returns from your mutual fund as compared to IRR and CAGR.