Fix Excel XIRR Returning 2.98E-09 Instead of Expected Loss
Question details
The user needs to correct an issue where the Excel XIRR function calculates an invalid near-zero value instead of the expected negative percentage for an investment loss.
- Product
- Spreadsheets
- Device & OS
- not provided
- Scenario
- Calculating the internal rate of return for a schedule of irregular cash flows that result in a significant overall investment loss.
- Observed behavior
- The XIRR formula calculates an invalid near-zero scientific notation value (approximately 2.98E-09) instead of returning the actual negative rate (such as -11%).
Ensure your cash flow data range contains at least one positive and one negative cash flow, and verify that all corresponding dates are formatted as valid dates rather than text.
Provide a Negative Initial Guess in the XIRR Formula
Guide the XIRR iteration algorithm to the correct negative rate by adding an estimated guess argument.
Excel's XIRR function uses an iterative technique to calculate the financial rate. When evaluating significant investment losses, the default calculation algorithm might fail to converge on the correct negative number. Instead of returning an error, it settles on an artificial near-zero result like 2.98E-09. Providing a negative guess manually points the algorithm in the correct direction.
Double-click the cell containing your faulty =XIRR(values, dates) formula to enter editing mode.
Edit the formula to include a third argument representing your estimated loss percentage. For example, if you expect an 11% loss, use -0.11.
Change the formula syntax to =XIRR(values, dates, -0.11) to include the new guess parameter.
Press Enter on your keyboard. The function should now calculate successfully and return the correct negative percentage instead of 2.98E-09.
Validate the XIRR Result Using the XNPV Function
Verify if the calculated XIRR rate is mathematically valid by checking its Net Present Value.
Calculate XIRR and Financial Functions Accurately with WPS Spreadsheets
WPS Office provides a highly reliable Spreadsheet application that supports all standard financial formulas, including XIRR, IRR, and XNPV. With full compatibility with Microsoft Excel files, you can seamlessly open your investment trackers and evaluate your cash flows without calculation glitches.
- 1. Open your spreadsheet: Launch WPS Spreadsheets and open your existing investment cash-flow document.
- 2. Navigate to Formulas: Select a blank cell where you want the result, click the Formulas tab on the top ribbon, and choose Financial.
- 3. Select XIRR: Click on the XIRR function from the drop-down menu to open the Function Arguments dialog box.
- 4. Input arguments: Select your cash-flow values, select the corresponding dates, and input a negative decimal (like -0.1) in the Guess field for a loss.
- 5. Calculate the rate: Click OK to immediately calculate your precise investment return rate without iteration errors.
Frequently Asked Questions
Why does the Excel XIRR function specifically return 2.98E-09?
The specific scientific notation value 2.98E-09 (or 0.00000000298) is a known mathematical artifact of the XIRR iteration algorithm. It occurs when the algorithm hits its calculation limits without finding a valid root, typically when evaluating extreme investment losses without a negative starting guess.
What is the default guess for the XIRR formula?
If you do not manually provide the third 'guess' argument in the XIRR formula, the spreadsheet program automatically assumes a starting guess of 10% (0.1). This positive starting point makes it difficult for the algorithm to calculate heavy losses.
Should I use IRR instead of XIRR for calculating investment losses?
You should only use the standard IRR function if your cash flows occur at perfectly regular, periodic intervals (such as exactly one month apart). If your cash flows occur on irregular dates, you must use XIRR, adjusting the guess parameter to ensure it calculates losses accurately.
