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Author: Radish Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3689  
Subject: Re: Quicken's Rate of Return incorrect Date: 4/23/1998 3:14 PM
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I've received an email from Intuit which essentially says that the help text is incorrect in stating that the results are the same as for an annually compounded bank account. Actually, the results are from the standard IRR formula, and thus have nothing to do with annually compounded bank accounts.

I'll have to see if I can dig up some info on where this "standard IRR" formula comes from. I checked the local library, but there was little mention of IRR in the accounting and investing books I found (usually just a cursory definition). It's clear to me that it has been derived from the formula for annually compounded interest, but I still think the way people are using it is not correct when short time periods are involved. I think it should really be derived from the formula for continuously compounded interest, or, if one is using days as one's smallest time unit, from daily compounded interest.

Thanks to everyone who responded to my original message!
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