XIRR is an Excel (R) tool which is used to calculate annualized yield of irregular cash flows. That means, if the cash flows are not regular (either in terms of date or amount), then this tool can be used to calculate the annual yield.
The formula to calculate XIRR is given below.
Consider the below table which gives the cash flows at irregular intervals.
Let us see how to calculate XIRR in Excel.
We can see that XIRR is 14.51%.