irr matlab,Internal rate of return

Find the internal rate of return for a simple investment with a unique positive rate of return. The initial investment is $100,000 and the following cash flows represent the yearly income from the investment

Year 1 $10,000

Year 2 $20,000

Year 3 $30,000

Year 4 $40,000

Year 5 $50,000

Calculate the internal rate of return on the investment:

Return = irr([-100000 10000 20000 30000 40000 50000])

Return = 0.1201

If the cash flow payments were monthly, then the resulting rate of return is multiplied by 12 for the annual rate of return.

Find Multiple Internal Rates of Return

Find the internal rate of return for multiple rates of return. The project has the following cash flows and a market rate of 10%.

CashFlow = [-1000 6000 -10900 5800]

CashFlow = 1×4

-1000 6000 -10900 5800

[Return, AllRates] = irr(CashFlow)

Return = 1.0000

AllRates = 3×1

-0.0488

1.0000

2.0488

The rates of return in AllRates are -4.88%, 100%, and 204.88%. Though some rates are lower and some higher than the market rate, based on the work of Hazen, any rate gives a consistent recommendation on the project. However, you can use a present value analysis in these kinds of situations. To check the present value of the project, use pvvar:

PV = pvvar(CashFlow,0.10)

PV = -196.0932

The second argument is the 10% market rate. The present value is -196.0932, negative, so the project is undesirable.