Internal Rate of Return - Code

2021 5 11

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更新时间：2021 5 11

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Hi, I'm trying to write a iteration- loop to calculate te internal rate of reuturn (IRR) (without the financial toolbox).

Problems are: how to set the while loop

how to set the iteration steps

solution so far: IRR= -Inf -> why -Inf ?

My code so far:

zaeler=1;  %% counter
w(1)=10; 
w(2)=0;
IRR=0.05;
IRR1=0.1;
IRR2=0.2;
while zaeler<10000                                 %% better would be: while interval by 0 
    for jahr=1:1:25
        s(jahr) = (cashflow(jahr)/((1+IRR)^jahr));
    end 
    w(zaeler) = sum(s)-invest ;                    %% w should be 0 
    if w(zaeler)>0 
        IRR=IRR1-(w(1)/(w(2)-w(1)))*(IRR2-IRR1);
        IRR1=IRR;
    elseif w(zaeler)<0
        IRR=IRR1-(w(1)/(w(2)-w(1)))*(IRR2-IRR1);
        IRR2=IRR;
    end
   zaeler=zaeler+1; 
end  

Thank you in advance for your ideas and help.

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MK 2021-5-11

在 MATLAB Online 中打开

Thank you for the hint with break!

I improved my code this way:

iteration=1; 
w(1)=10; %start value
w(2)=0;
IRR=0.05;
IRR1=0.01; %Min IRR (start-value)
IRR2=0.5;  %Max IRR
limit= 0.00001; 
for iteration<10000 
    for jahr=1:1:25
        s(jahr) = (cashflow(jahr)/((1+IRR)^jahr));
    end 
    w(iteration) = sum(s)-invest ;    % SOLL w= 0                                        
    if w(iteration)>= 0 && w(iteration)< limit
        break
    elseif w(iteration)> limit                                             %% IRR to hight
        IRR= (IRR1+IRR2)/2; 
        IRR1=IRR;                                                          %% set IRR lower
    elseif w(iteration)<0                                                  %% IRR to low -> (w<0)
        IRR= (IRR1+IRR2)/2
        IRR2=IRR;                                                          %% IRR higher
    end
    % IRR_check(iteration)=IRR ;
     iteration=iteration+1; 
end   

I get these values for w: (to high values and converge to a value far from 0)

there must be a mistake in setting the IRR, I guess.

w: 1x9999 double =
   1.0e+05 *
  Columns 1 through 12
   -3.1570   -5.4823   -4.9124   -3.8592   -2.7531   -1.9262   -1.4160   -1.1320   -0.9821   -0.9051   -0.8660   -0.8463
  Columns 13 through 24
   -0.8365   -0.8315   -0.8291   -0.8278   -0.8272   -0.8269   -0.8267   -0.8267   -0.8266   -0.8266   -0.8266   -0.8266
  Columns 25 through 36
   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266   -0.8266
  ... 

Rik 2021-5-11

You should step through your code and closely look at what values your variables have after each line.

And why did you write for iteration<10000? It does something, but I expect you want for iteration=1:10000 instead (and remove iteration=iteration+1;).

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