HP-12C IRR Cash Flow

HP-12C IRR (TIR) cash flow

The IRR (Internal Rate of Return) is whatever discount rate drives NPV to zero: Σ CF_t / (1+IRR)^t = 0. On the HP-12C you enter the initial investment as CFo (negative), the later flows as CFj, repetitions as Nj, then hit [f] [IRR]. The calculator solves this iteratively with Newton-Raphson, and it can diverge once the cash flow changes sign more than once. In that case, reach for MIRR.

Take the project on when IRR beats the cost of capital (WACC). Watch the catches: non-conventional flows can produce multiple roots, and the metric ignores the rate at which you actually reinvest intermediate cash (MIRR handles that). Brazil's B3 uses it in tender evaluations, and it shows up on the ANBIMA CEA exam.

Applications

CFA, ANBIMA CEA/CFG/CFP, B3 IPO evaluation, projetos infraestrutura BNDES, M&A due diligence, real estate investment analysis.

FAQ

What if HP-12C shows "Error 7"? The IRR didn't converge. Feed it a starting guess with [STO] [0] [g] [R/S].

NPV vs IRR for ranking? Use NPV when you care about the absolute value created, IRR when you want a return rate. On mutually exclusive projects the two can point in different directions.

MIRR vs IRR? MIRR assumes intermediate flows get reinvested at WACC (mais realista), while plain IRR assumes they earn the IRR itself.