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# Excel IRR function - clueless and questions about the GUESS argument

Posted on 2016-07-21

the IRR function makes sense when you take a calculation like:

-1,200 - cash outlay for a new ice cream machine.

+ 500 year one cash flow

+300 Year two cash flow

+400 Year three cash flow

+400 Year four cash flow

13%

Okay. So why use the GUESS argument when I successfully figured out the IRR above without using GUESS?

I'm trying to understand why you would use guess. Perhaps a couple examples of when to NOT use and when TO use GUESS?

I googled this and came up with some fairly erudite math explanations but I'm not a math major . So, please