Notes on IRR Calculation:
In order for an internal rate of return (IRR) to be calculated, the cash flow in at least one period studied should be negative. IRR is the interest rate at which the sum of all net cash flows sums to zero over the study period. If all of the cash flows are positive, an infinite IRR results meaning the function never converges and returns the error, "#NUM!".
Example: If the consolidation ratio (the number of virtual servers per physical server) is changed with all other inputs held constant and an initial guess of 1 for the IRR function, we can see that the IRR is calculating for certain cases:
Note that these results were obtained using the default input values:
