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st: Internal Rate of Return Calculation


From   "M. S." <shanghaiexpat09@googlemail.com>
To   statalist@hsphsun2.harvard.edu
Subject   st: Internal Rate of Return Calculation
Date   Tue, 14 Jun 2011 08:07:38 +0200

Dear Statalisters:

 I am searching for a more convenient way to calculate internal rates
of return. I should mention, that I am not that experienced with Stata
at this point.

 I have a function like this:

 Net Present Value = Value0+ value1/(1+irr)^1+ value2/ (1+irr)^2 . . .
+ value6/(1+irr)^5*(irr-growth) – price

 To find the discount rate irr that makes the function equal to zero I
am currently using a forvalues loop which increases or decreases the
discount factor given the current value of Net Present Value. This
requires me to recalculate the result all the time and to use several
if-conditions so that irr is changed by 1% at first and later by 0.1%,
0.01% and so on . . .

 Is there a more convenient way to find the discount factor? When I
searched, I only found a function called “finirr” but I couldn´t find
any documentation for it and my data do not describe as a time series.

 I look forward to any input you could give me on that issue and
really appreciate every help!

 Kind regards,

Martin

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