How to Use the RRI Function in Excel

The RRI function in Excel and Google Sheets calculates the required interest rate for a cash flow series, standing for “Rate of Return Internal.” It is ideal for determining the interest rate that brings the net present value of cash flows to zero, thus aiding in the evaluation of investment or project profitability.

Syntax

The RRI function syntax is as follows:

RRI(nper, pv, fv)

nper – Total number of periods.
pv – Present value or initial investment amount.
fv – Future value or the cash balance aimed after the final payment.

Examples of Using RRI Function

Below are examples illustrating the use of the RRI function in Excel and Google Sheets:

Example 1: Determining the Interest Rate

Consider an initial investment of $1000 that is expected to grow to $1500 over 5 years. To find the interest rate, apply the RRI function as follows:

nper	pv	fv
5	-1000	1500

In Excel, use the formula:

=RRI(5, -1000, 1500)

This will calculate the annual interest rate required for your investment to reach $1500 after 5 years.

Example 2: Evaluating Project Profitability

Imagine a project requiring an initial expenditure of $5000, expected to generate $2000 annually over the next four years. To assess the project’s internal rate of return (IRR), calculate as follows:

nper	pv	fv
4	-5000	0
	2000	0

In Excel, the formula would be:

=RRI(4, -5000, 0) + (RRI(4, 2000, 0) / 4)

This computation using the RRI function helps you determine the project’s IRR to make well-informed investment choices.

More information: https://support.microsoft.com/en-us/office/rri-function-6f5822d8-7ef1-4233-944c-79e8172930f4

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ACCRINTM

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AMORDEGRC

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AMORLINC

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COUPDAYBS

Returns the number of days from the beginning of the coupon period to the settlement date

COUPDAYS

Returns the number of days in the coupon period that contains the settlement date

COUPDAYSNC

Returns the number of days from the settlement date to the next coupon date

COUPNCD

Returns the next coupon date after the settlement date

COUPNUM

Returns the number of coupons payable between the settlement date and maturity date

COUPPCD

Returns the previous coupon date before the settlement date

CUMIPMT

Returns the cumulative interest paid between two periods

CUMPRINC

Returns the cumulative principal paid on a loan between two periods

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DDB

Returns the depreciation of an asset for a specified period by using the double-declining balance method or some other method that you specify

DISC

Returns the discount rate for a security

DOLLARDE

Converts a dollar price, expressed as a fraction, into a dollar price, expressed as a decimal number

DOLLARFR

Converts a dollar price, expressed as a decimal number, into a dollar price, expressed as a fraction

DURATION

Returns the annual duration of a security with periodic interest payments

EFFECT

Returns the effective annual interest rate

Returns the future value of an investment

FVSCHEDULE

Returns the future value of an initial principal after applying a series of compound interest rates

INTRATE

Returns the interest rate for a fully invested security

IPMT

Returns the interest payment for an investment for a given period

IRR

Returns the internal rate of return for a series of cash flows

ISPMT

Calculates the interest paid during a specific period of an investment

MDURATION

Returns the Macauley modified duration for a security with an assumed par value of $100

MIRR

Returns the internal rate of return where positive and negative cash flows are financed at different rates

NOMINAL

Returns the annual nominal interest rate

NPER

Returns the number of periods for an investment

NPV

Returns the net present value of an investment based on a series of periodic cash flows and a discount rate

ODDFPRICE

Returns the price per $100 face value of a security with an odd first period

ODDFYIELD

Returns the yield of a security with an odd first period

ODDLPRICE

Returns the price per $100 face value of a security with an odd last period

ODDLYIELD

Returns the yield of a security with an odd last period

PDURATION

Returns the number of periods required by an investment to reach a specified value

PMT

Returns the periodic payment for an annuity

PPMT

Returns the payment on the principal for an investment for a given period

PRICE

Returns the price per $100 face value of a security that pays periodic interest

PRICEDISC

Returns the price per $100 face value of a discounted security

PRICEMAT

Returns the price per $100 face value of a security that pays interest at maturity

Returns the present value of an investment

RATE

Returns the interest rate per period of an annuity

RECEIVED

Returns the amount received at maturity for a fully invested security

SLN

Returns the straight-line depreciation of an asset for one period

SYD

Returns the sum-of-years' digits depreciation of an asset for a specified period

TBILLEQ

Returns the bond-equivalent yield for a Treasury bill

TBILLPRICE

Returns the price per $100 face value for a Treasury bill

TBILLYIELD

Returns the yield for a Treasury bill

VDB

Returns the depreciation of an asset for a specified or partial period by using a declining balance method

XIRR

Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic

XNPV

Returns the net present value for a schedule of cash flows that is not necessarily periodic

YIELD

Returns the yield on a security that pays periodic interest

YIELDDISC

Returns the annual yield for a discounted security; for example, a Treasury bill

YIELDMAT

Returns the annual yield of a security that pays interest at maturity