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 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.