The IRR function calculates the internal rate of return for a series of positive and negative transactions. It can be used either with all transactions over a timescale, or with specified transactions on certain dates.

The internal rate of return is the annual rate of return an investment is expected to generate. You could use the IRR function to assess a number of investments and find the most effective investment.

The IRR function has two different syntaxes. The syntax that applies depends on whether you use more or less than two arguments with the function.

IRR(Cash flow [, Estimate])

IRR(Cash flow, Dates, Transactions [, Estimate])

 Argument Data type Description Cash flow (required) Number A line item that contains a series of positive and negative values that represent cash inflow and outflow. The line item used for this argument must have a time scale. Estimate Number An estimate of the IRR. This argument uses percentage format, so 0.1 is equal to 10%. This argument is optional and helps the IRR function to calculate a result more quickly.
 Argument Data type Description Cash flow (required) Number A series of positive and negative values that represent cash inflow and outflow. Must have the list used for the Transactions argument as a dimension. Dates (required) Date The date associated with each value of the Cash flow argument. Transactions (required) List A list of transactions, which must be a common dimension of the Cash flow and Dates argument. Estimate of rate Number An estimate of the IRR. This argument uses percentage format, so 0.1 is equal to 10%. This argument is optional and helps the IRR function to calculate a result more quickly.

The IRR function returns a number.

IRR is the iterative solution to this equation:

$0 = \Sigma_{i = 1}^{n} \dfrac{p_i}{(1+IRR) ^{d}i/365}$

In this equation:

• N is the number of payments in and out from the start of the first period
• Pi is the payment in the ith period
• di is the number of days from the start of the first period

You can reference the Users list with the IRR function. However, you cannot reference specific users within the Users list as this is production data, which can change and make your formula invalid.

The Cashflow argument must contain at least one positive and one negative value.

Most financial functions are currently unavailable in Polaris. Learn more about the differences between Anaplan calculation engines.

This example uses two modules. The first module, Annual cash flow, contains Cash flow line item with a Time Scale of Year. The Cash flow line item contains both a positive and negative value.

 FY20 FY21 FY22 Cash flow -100,000 0 130,000

The second module contains a single Percent format line item, which contains a formula that uses IRR with the Cash flow line item from the first module. As the IRR function returns a single value, the result does not need a time dimension.

 IRR of annual cash flow IRR('Annual cash flow'.Cash flow) 14.0%

In this example, two modules are used. One source module, Plant Transaction Data, is dimensioned by the Transactions and Plants lists. Transactions is on rows, and Plants is on pages, with Plant 1 selected.

The Plant Transaction Data module contains the values of transactions, dates of transactions, and a description for some transactions.

 Description Cash flow Date Transaction 01 Land purchase -100,000 1/1/2011 Transaction 02 Turbine purchase -850,000 1/1/2012 Transaction 03 Energy generation revenue 200,000 1/3/2013 Transaction 04 Energy generation revenue 200,000 1/3/2014 Transaction 05 Energy generation revenue 200,000 1/3/2015 Transaction 06 Energy generation revenue 200,000 1/3/2016 Transaction 07 Energy generation revenue 200,000 1/3/2017 Transaction 08 Energy generation revenue 200,000 1/3/2018 Transaction 09 Energy generation revenue 200,000 1/3/2019 Transaction 10 Energy generation revenue 200,000 1/3/2020 Transaction 11 Energy generation revenue 200,000 1/3/2021 Transaction 12 Energy generation revenue 200,000 1/3/2022 Transaction 13 Energy generation revenue 200,000 1/3/2023 Transaction 14 Energy generation revenue 200,000 1/3/2024 Transaction 15 Energy generation revenue 200,000 1/3/2025 Transaction 16 Final energy generation revenue 200,000 1/3/2026 Total 1,850,000

The second module uses the data from the Plant Transaction Data module with the IRR function to calculate the internal rate of return for each plant. The column for Plant 1 contains the internal rate of return for data displayed in the Plant Transaction Data module.

 Plant 1 Plant 2 Plant 3 Plant 4 Internal Return Rate for Plant IRR('Plant Transaction Data'.Cash flow, 'Plant Transactions Data'.Date, Transactions, 0.1) 18.1% 12.2% 13.8% 9.2%