Formula

The formula for the IRR calculation is:
MVE = MVB x (1 + IRR) + CF₁ x (1 + IRR) ^W1 … + CF_n x (1+ IRR) ^Wn
where:
MVE is market value ending
MVB is market value beginning
IRR is internal rate of return
CF is cash flow amount
W is weight (Number of Days Cash Flow is Present) / (Num of Days in Period)

The time-of-day assumption is important to determine the proper weight. Below are the most common assumptions:

• Beginning of Day. Present for the date of the cash flow

• Middle of Day. Present for half of the date of the cash flow

• End of Day. Present after the date of the cash flow

Examples of the time-of-day assumptions are:

• Beginning of Day. Number of Days between Cash flow Date and Begin Date + 1

• Middle of Day. Number of Days between Cash flow Date and Begin Date + 0.5

• End of Day. Number of Days between Cash flow Date and Begin Date