Microsoft Office Tutorials and References
In Depth Information
Using the FVSCHEDULE Function
Figure 12-19: The XIRR function works with irregular cash flows.
The formula in B15 is
=XIRR(B4:B13,A4:A13)
The XIRR function has the same problem with multiple rates of return as IRR. It expects
that the cash flow changes signs only once: that is, goes from negative to positive or
from positive to negative. If the sign changes more than once, it is essential that you
plug the XIRR result back into an XNPV function to verify that it returns zero. Figure
12-19 shows such a verification although the sign only changes once in that example.
Using the FVSCHEDULE Function
The FVSCHEDULE function calculates the future value of an initial amount, after applying a series
of varying rates over time. Its syntax is
FVSCHEDULE(principal,schedule)
Calculating an annual return
You can use the FVSCHEDULE function to convert a series of monthly returns into an annual
return. Figure 12-20 shows the monthly returns for a mutual fund.
You can find the example in this section on the companion CD-ROM in a workbook
named fvschedule.xlsx .
 
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