Irr Library Is Only Good If The Pay Period And Compound Period Is In Years (engineering Economy)

http://docs.scipy.org/doc/numpy-1.10.0/reference/generated/numpy.irr.html The link above works for me only when the pay period and compound period are in years. If they in months o

Solution 1:

Let us assume we have a monthly flow, for example:

flow = [-1, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 1.4]
x = np.irr(flow)
x
0.0284361557263606

to compute IRR you need to use the following formula: IRR = (1 + x)**12 - 1

(1 + x) ** 12 - 10.39999999999998925

If you have quarterly flow, use the formula acordingly:

IRR = (1 + np.irr(quarterly_flow)) ** 4 - 1

Solution 2:

According to numPy link that you provided. It's for periodic IRR, which means, it depends on what is your definition of 'periodic' it could be monthly or annually.

For example, as I followed your provided data:

amount_arr = [-17.99, 7.99, -3.00, 7.99, -3.00, 7.99, -3.00, 7.99, -3.00, 7.99, -3.00, 7.99]
​
airr = np.irr(amount_arr)
​
print ('periodic IRR is %2.2f%%' %(100 * airr))
print ('annual is %2.2f%%' %(12 * (100 * airr)))

> periodic IRR is12.22%
> annual is146.66%

Hope it helps.