From: bug@...
Date: 2008-02-10T04:44:56+09:00
Subject: Re: Internal Rate of Return (#156)

On Feb 9, 6:08 am, ThoML <micat...@gmail.com> wrote:
> How should the following values be handeld? According to some info I
> found somewhere, 0..2 should be considered illegal, which doesn't
> quite match my computations though.
>
> [-1.0, 1.0]
> [-1000.0, 999.99]
> [-1000.0, 999.0]
> [0.0]
> []
>
> Regards,
> Thomas.

Yes, (0..2) doesn't make any sense at all, nor does anything that has
an initial investment of $0.  The IRR would be 0/0, which can be
anything, and so you may return anything (or throw an error) if the
first element is a 0.  An input list of less than two elements is
similarly ambiguous.  As for the others, they do in fact have real
IRRs:

[-1.0, 1.0] => 0.0%
[-1000.0, 999.99] => -0.0001%
[-1000.0, 999.0] => -0.01%

The first case is interesting, however, because you will not be able
to find an IRR of 0% exactly if you are using an iterative solution,
only approach it, depending on how many iterations you use.  Also, the
formula does not allow -100% IRR, even though it may be possible.

Harrison Reiser