internal_rate_schedule

Evaluates the internal rate of return for a schedule of cash flows. It is not necessary that the cash flows be periodic.

Synopsis

#include <imsl.h>

float imsl_f_internal_rate_schedule (int count, float values[], struct tm dates[], …, 0)

The type double function is imsl_d_internal_rate_schedule.

Required Arguments

int count (Input)
Number of cash flows in values. count must be greater than one.

float values[] (Input)
Array of size count of cash flows, which includes the initial investment.

struct tm dates[] (Input)
Array of size count of dates cash flows are made see the Usage Notes section of this chapter.

Return Value

The internal rate of return for a schedule of cash flows that is not necessarily periodic. If no result can be computed, NaN is returned.

Synopsis with Optional Arguments

#include <imsl.h>

float imsl_f_internal__rate_schedule (int count, float values[], struct tm dates[],

IMSL_XGUESS, float guess,

IMSL_HIGHEST, float max,

0)

Optional Arguments

IMSL_XGUESS, float guess (Input)
Initial guess at the internal rate of return.

IMSL_HIGHEST, float max (Input)
Maximum value of the internal rate of return allowed.
Default: 1.0 (100%)

Description

Function imsl_f_internal_rate_schedule computes the internal rate of return for a schedule of cash flows that is not necessarily periodic. The internal rate such that the stream of payments has a net present value of zero.

It can be found by solving the following:

 

In the equation above, di represents the i-th payment date. d1 represents the 1st payment date. valuei represents the i-th cash flow. rate is the internal rate of return.

Example

In this example, imsl_f_internal_rate_schedule computes the internal rate of return for nine cash flows, -$800, $800, $800, $600, $600, $800, $800, $700 and $3,000, with an initial investment of $4,500.

 

#include <stdio.h>

#include <imsl.h>

 

int main()

{

float values[10] = { -4500., -800., 800., 800., 600., 600.,

800., 800., 700., 3000. };

struct tm dates[10];

float xirr;

 

dates[0].tm_year = 98; dates[0].tm_mon = 0; dates[0].tm_mday = 1;

dates[1].tm_year = 98; dates[1].tm_mon = 9; dates[1].tm_mday = 1;

dates[2].tm_year = 99; dates[2].tm_mon = 4; dates[2].tm_mday = 5;

dates[3].tm_year = 100; dates[3].tm_mon = 4; dates[3].tm_mday = 5;

dates[4].tm_year = 101; dates[4].tm_mon = 5; dates[4].tm_mday = 1;

dates[5].tm_year = 102; dates[5].tm_mon = 6; dates[5].tm_mday = 1;

dates[6].tm_year = 103; dates[6].tm_mon = 7; dates[6].tm_mday = 30;

dates[7].tm_year = 104; dates[7].tm_mon = 8; dates[7].tm_mday = 15;

dates[8].tm_year = 105; dates[8].tm_mon = 9; dates[8].tm_mday = 15;

dates[9].tm_year = 106; dates[9].tm_mon = 10; dates[9].tm_mday = 1;

 

xirr = imsl_f_internal_rate_schedule (10, values, dates, 0);

printf ("After approximately 9 years, the internal\n");

printf ("rate of return on the cows is %.2f%%.\n", xirr * 100.);

}

Output

 

After approximately 9 years, the internal

rate of return on the cows is 7.69%.