How to Use the IMCSCH Function in Excel
Introduction
The IMCSCH function in Microsoft Excel and Google Sheets is designed to compute the modified internal rate of return (MIRR) for a sequence of cash flows occurring at irregular intervals. For accuracy, this function accommodates the reinvestment rate for positive cash flows and the finance rate for negative cash flows.
Syntax
The syntax for the IMCSCH function is as follows:
IMCSCH(values, finance_rate, reinvest_rate)values: An array or a range of cells containing the cash flows.finance_rate: The interest rate charged on borrowed funds.reinvest_rate: The interest rate earned on reinvested funds.
Examples
Consider the following set of cash flows:
| Year | Cash Flow |
|---|---|
| 0 | -$100,000 |
| 1 | $30,000 |
| 2 | $40,000 |
| 3 | $50,000 |
To calculate the modified internal rate of return using the IMCSCH function, apply the following formula:
=IMCSCH(B2:B5, 10%, 8%)This formula uses B2:B5 as the range for cash flows, 10% as the finance rate, and 8% as the reinvestment rate.
Use cases
The IMCSCH function is integral in financial analysis for appraising the returns on investment projects or for any investment featuring irregular cash flows. By incorporating different rates for financing and reinvestment, it provides a nuanced view of the overall return.
Overall, the IMCSCH function serves as an essential tool for finance professionals tasked with evaluating complex cash flow situations and determining investment viability through the lens of modified internal rate of return.
More information: https://support.microsoft.com/en-us/office/imcsch-function-c0ae4f54-5f09-4fef-8da0-dc33ea2c5ca9