The "internal interest rate" calculation method

In addition to the familiar performance calculation methods, the Infront Portfolio Manager offers a further variant, the so-called "internal rate of return". The day count can be switched between stock exchange days and calendar days (according to the global setting "Calculate average available capital on stock exchange days (otherwise calendar days)", the configuration of the performance components is taken into account.

If necessary, read the sections Depotinstellungen - Vermögensbewertung and Configuring performance components.

For performance time series, 0% is used as the starting value. This calculation method is based on the MM-Talk function on depot valuation InternalRateOfReturn, in which a (different) start value can be specified via the "Start value" parameter.

The result of the function searches for a numerical solution to the formula for the internal interest rate for the period of the securities account valuation (start date to evaluation date) based on the specified start value (initial estimate). The Newton method is used for this. If the initial estimate is too far away from the actual value, it can happen that no result is found, even if one exists. If no start value is specified, 0% is used as the start value. If the asset value of the securities account object for which the internal interest rate is to be calculated is negative at the start (start date) or end (evaluation date), no calculation is carried out.

Delivered results are not less than -100%. Under certain circumstances, there may be no or several solutions for the equation of the internal interest rate. In these cases, the first value found is returned, or "n/a" if no result is found.