Function InvestmentVariableInternalRateReturnInPeriodic(Value, Date, Basis, LowerBound, UpperBound, Error)

InvestmentVariableInternalRateReturnInPeriodic

The function InvestmentVariableInternalRateReturnInPeriodic returns the internal rate of return for an investment based on a series of in-periodic cash flows. The internal rate of return is the interest rate received for an investment. This function uses the procedure InvestmentVariableInternalRateReturnInPeriodicAll to determine all possible internal rates and returns the internal rate that is within the specified bounds.

InvestmentVariableInternalRateReturnInPeriodic(
    Value,                   ! (input) one-dimensional numerical expression
    Date,                    ! (input) one-dimensional string expression
    [Basis,]                 ! (optional) numerical expression
    [LowerBound,]            ! (optional) numerical expression
    [UpperBound,]            ! (optional) numerical expression
    [Error]                  ! (optional) numerical expression
    )

Arguments

Value

The periodic payments (positive or negative), which must be equally spaced in time. The order of the payments in Value must be the same as the order in which the cash flows occur. Value is an one dimensional parameter of real numbers. Value given by positive numbers represent incoming amounts and Value given by negative numbers represent outgoing amounts. em Value must contain at least one positive and at least one negative number.

Date

The dates on which the payments occur. Date and Value must have the same order. Date is an one-dimensional parameter of dates given in a date format. The first payment date indicates the beginning of the schedule of payments. All other dates must be later than this date, but they may occur in any order. Date should contain as many dates as the number of values given by Value.

Basis

The day-count basis method to be used. The default is 1.

LowerBound

Indicates a minimum for the internal rate to be accepted by this function. The default is \(-1\).

UpperBound

Indicates a maximum for the internal rate to be accepted by this function. The default is \(5\).

Error

Indicates whether AIMMS should give an error if multiple solutions are found that satisfy the bounds. \(Error = 0\): if multiple solutions are found, return the solution with the smallest absolute value. \(Error = 1\): if multiple solutions are found, return an error message. The default is \(0\).

Return Value

The function InvestmentVariableInternalRateReturnInPeriodic returns the internal rate of return for an investment based on a series of in-periodic cash flows. The internal rate of return is the interest rate received for an investment.

Note

Example

Often, internal rate of return is an investment first, (period 0, negative value), and then return cashflows in following periods.

_s_periods := ElementRange(0,4);
_p_val('0') := -100 ;
_p_val('1') := 25 ;
_p_val(_i_per | _i_per > '1') := _p_val(_i_per-1) * 1.1 ;
_sp_startQuarter(_i_per) := MomentToString(
    Format        :  "%c%y-%m-%d",
    unit          :  [month],
    ReferenceDate :  "2024-01-01",
    Elapsed       :  ((ord(_i_per)-1)*3)[month]);

_p_irr := InvestmentVariableInternalRateReturnInPeriodic(
    value      :  _p_val,
    date       :  _sp_startQuarter,
    LowerBound :  -1,
    UpperBound :  5,
    Error      :  1);
block where single_column_display := 1, listing_number_precision := 6 ;
    display { _p_val, _sp_startQuarter }, _p_irr ;
endblock ;

This results in the following IRR:

Composite table:
    _i_per         _p_val  _sp_startQuarter
!   ------    -----------  ----------------
         0    -100.000000  "2024-01-01"
         1      25.000000  "2024-04-01"
         2      27.500000  "2024-07-01"
         3      30.250000  "2024-10-01"
         4      33.275000  "2025-01-01"
    ;

    _p_irr := 0.258815 ;

References