IRR theoretical question

[mduggar]

Hi--

I have three separate streams of cash flows. the first entry in each series is negative. The other items can be positive or negative. I calculate the IRRs for each of the three streams. Lets call them IRR1, IRR2, IRR3. I also calculate the IRR for a fourth stream which is a sum of the first three streams. Lets call it IRR4. Is it possible that IRR4 is greater then IRR1, IRR2, IRR3?

 

[mduggar]

IRR question

I agree with you, both on the fact that I have not given you enough data and on your point that it would be unusual to find IRR4 be greater than all other IRRs. I tried to create an example which produces this but could not. However, my client, who wont share the data with me for privacy reasons claims he is getting this result. It is possible that there is something wrong with his calcs, but I cannot verify that. Thanks for your response. It confirms my view.