From: Christopher Dicely <cmdicely@...>
Date: 2008-02-10T05:02:39+09:00
Subject: Re: Internal Rate of Return (#156)

On Feb 9, 2008 11:44 AM,  <bug@insecti.com> wrote:
>
> 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.

Is that really a special result of the first case? It seems to me any
iterative method is likely to only approximate any result except for
the one used as the initial starting point (of course, if zero is the
initial starting point, then it can get zero exactly).