Return measurement
Extended Internal Rate of Return (XIRR)
Annualized IRR for cash flows occurring on irregular dates.
What Extended Internal Rate of Return Means
XIRR discounts each dated cash flow according to its fraction of a year from a base date, commonly using 365 days.
Extended Internal Rate of Return Formula
0 = Σᵢ CFᵢ ÷ (1 + XIRR)^((dateᵢ − date₀) ÷ 365)
How to Read the Result
A contribution, later deposit, and final value are discounted using their exact dates rather than equal periods.
Limitations
- It can have the same multiple-root issue as IRR.
- Day-count conventions matter.
- A valid solution does not prove attractiveness.
Common Questions
Is XIRR annualized?
Yes. Its exponent converts elapsed days into years under the selected convention.