IRR Office-1054

[Patrick Durusau <patrick@durusau.net>]

Greetings,

http://tools.oasis-open.org/issues/browse/OFFICE-1054

The current text reads:

Compute the internal rate of return for a series of cash flows. If provided, Guess is an estimate of the interest rate to start the iterative computation. If omitted, the value 0.1 (10%) is assumed.

The result of IRR is the rate at which the NPV() function will return zero with the given values.

Note that the syntax include the default 0.1 value.

Rob has proposed:

Semantics: Compute the internal rate of return for a series of cash flows.

The result of IRR is the rate at which the NPV() function will return zero with the given Values.

There is no closed form for IRR. Implementations typically return an approximate solution using an iterative method, in which case the Guess parameter may be used to initialize the iteration. If the implementation is unable to converge on a solution given a particular Guess, it may return an error.

OK, no problem with first two sentences.

What to do with the default value in the syntax if we drop it from semantics?

Further suggestion, why not simply say:

"If provided, Guess is an estimate of the interest rate to start the iterative computation. If omitted, the value 0.1 (10%) is assumed. If an evaluator is unable to converge on a solution given a particular Guess, it may return an error."

Observations about what implementations normally do being outside our area of concern, at least for normative text.

Hope everyone is having a great day!

Patrick

-- 
Patrick Durusau
patrick@durusau.net
Chair, V1 - US TAG to JTC 1/SC 34
Convener, JTC 1/SC 34/WG 3 (Topic Maps)
Editor, OpenDocument Format TC (OASIS), Project Editor ISO/IEC 26300
Co-Editor, ISO/IEC 13250-1, 13250-5 (Topic Maps)