Quote Originally Posted by BJ1 View Post
Cool Bear, I'm not convinced. Shouldn't the formula return the exact interest rate, calculated on the cash flows stipulated and not make assumptions about reinvestment of cash not recorded in the stipulated flows? For a one month period it should not produce an outcome 3.58% above the actual one month's interest. Should there be compounding in a one month investment? I'll have another play if tomorrow has free time.
The annualised result without reinvestment assumption is fundamentally flawed that it ignores the time value of money.

That would also suggest you would be indifferent to the following cashflows below... Which clearly can not be correct.

1/ negative 10million outflow on 1-January-2017 , then 1 million monthly over the next 12 months.

2/ negative 10million outflow on 1-January-2017, then 12million received on 1-January-2018