## How to use the RRI function

**What is the RRI function?**

The RRI function calculates the growth of an investment in percent per period.

**What is the difference between the RRI function and the RATE function?**

RRI calculates the net rate of return for an investment based on the invested value and future value.

RATE calculates the periodic interest rate required to achieve a certain future value from given cash flows, invested value, and future value.

RATE(nper, pmt, pv, [fv], [type])

RRI(Nper, Pv, Fv)

**What is an investment?**

An investment is an asset or business acquired with the goal of generating income or appreciation, the purpose is to grow the money over time.

**What are periods?**

A payment period is the length of time between payments made on a loan or investment. For example, a loan with monthly payments the payment period would be one month. A loan with quarterly payments the payment period would be three months.

**What is present value?**

The present value is the initial amount that will earn interest/dividend.

**What is future value?**

The compounded amount after the calculated periods based on the given rate. It measures what a current capital (present value) amount will be worth at a designated future date.

**What are periodic constant payments?**

Periodic constant payments are payments that are made at regular intervals such as monthly, quarterly, or yearly and have the same amount each time.

**What is a constant interest rate?**

A fixed interest rate is an interest rate that remains the same throughout the term of a loan or an investment.

**What is the number of compounding periods per year?**

The number of compounding periods per year refers to how often interest is compounded annually on an investment or loan.

Some common compounding periods:

- Annually - 1 compounding period per year
- Semiannually - 2 compounding periods per year
- Quarterly - 4 compounding periods per year
- Monthly - 12 compounding periods per year
- Weekly - 52 compounding periods per year
- Daily - 365 compounding periods per year

**What is compounding?**

Compounding refers to the process of generating more interest from interest that was previously earned. It causes interest to grow exponentially over time.

**Related functions**

Function | Description |
---|---|

RATE(nper, pmt, pv, [fv], [type]) | Returns the interest rate per period of an annuity |

PV(rate, nper, pmt, [fv], [type]) | Returns the present value of an investment. |

FV(rate, nper, pmt, [pv], [type]) | Returns the future value of an investment. |

PDURATION(rate, pv, fv) | Returns the periods needed for an investment to reach a future value. |

Formula in cell C6:

### RRI Function Syntax

RRI(*Nper, Pv, Fv)*

### RRI Function Arguments

Nper |
Required. Nper is the number of periods. |

Pv |
Required. Pv is the present value. |

Fv |
Required. Fv is the future value. |

### RRI Function not working

The RRI function returns:

- #VALUE! error if arguments
*are*Â not a valid data type. - #NUM! error if the arguments are not valid.

### How is the RRI Function calculated?

RRI = (Fv/Pv)^{(1/nper)}

Fv - future value

Pv - present value

nper - periods

The equivalent formula is:

### Functions in 'Financial' category

The RRI function function is one of many functions in the 'Financial' category.

### Excel function categories

### Excel categories

### 2 Responses to “How to use the RRI function”

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I think the equivalent formula is =(C4/C3)^(1/C2)-1. Otherwise, you get 102.93%.

Thank you Greg. You are right.