When does XIRR differ significantly from IRR?

When cash flows occur irregularly — a deal closing mid-year, quarterly distributions with uneven spacing, and a sale 3.7 years into the hold all create XIRR vs IRR differences.

How to calculate XIRR?

XIRR solves for the rate r that makes NPV = 0 using actual dates. Excel XIRR function: =XIRR(values, dates, guess). Returns annualized rate accounting for exact timing.

Is XIRR always higher or lower than IRR?

Neither always. Depends on timing. Early distributions inflate XIRR vs annual IRR; later-than-period-end distributions deflate it. Use XIRR for accuracy.

IRR vs XIRR Comparison Calculator

Compare IRR (assumes equal periodic intervals) vs XIRR (handles irregular cash flow dates). XIRR is more accurate for real estate with irregular distribution dates and closing timing.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Compare IRR (assumes equal periodic intervals) vs XIRR (handles irregular cash flow dates). XIRR is more accurate for real estate with irregular distribution dates and closing timing. Use the irr vs xirr result to inform your calculation.

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IRR vs XIRR Comparison Calculator

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Frequently Asked Questions

When does XIRR differ significantly from IRR?

How to calculate XIRR?

Is XIRR always higher or lower than IRR?