Online XIRR Calculator: Your Key to Smarter Investment Decisions

Online XIRR Calculator







Online XIRR Calculator Methodology

The Online XIRR Calculator is a tool designed to compute the XIRR (Extended Internal Rate of Return) for financial investments. XIRR is a useful metric for evaluating the performance of investments over time, taking into account both the timing and magnitude of cash flows.

The calculation process employed by the Online XIRR Calculator utilizes an iterative approximation technique known as the bisection method. This method aims to determine the rate of return that equates the present value of all cash inflows and outflows to zero.

To begin the calculation, the Online XIRR Calculator first defines the cash flows based on the amount invested and the amount at maturity. It then calculates the time periods corresponding to each cash flow.

Next, the bisection method is initiated with initial bounds for the rate of return, typically set between -1.0 and 1.0. The method iteratively refines these bounds until the present value of cash flows converges to zero within a specified tolerance.

The formula used by the Online XIRR Calculator to compute XIRR is based on the iterative process described above. It iteratively adjusts the rate of return until the present value of all cash flows equals zero.

In cases where the calculation fails to converge within a maximum number of iterations, or if any of the inputs provided to the Online XIRR Calculator are non-positive, the resulting XIRR value is considered invalid and may not accurately represent the investment.

About the Author

Author Avatar
Getaka

Getaka, CFA, a financial analyst with 15 years of experience in the industry. Getaka holds an MBA degree and the Chartered Financial Analyst designation, demonstrating his profound understanding of financial analysis and investment management. Throughout his career, he has conducted numerous financial analyses and due diligence processes for companies in the industry, and has a strong track record of identifying key trends and opportunities. He leverages his expertise to deliver a thorough financial analysis of a company, encompassing its financial performance, key ratios, future prospects, and risks. Getaka is committed to providing accurate, reliable, and trustworthy information to help readers make informed decisions about their finances and investments.