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Updated over 4 years ago on . Most recent reply

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Cole Haan
  • Houston, TX
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IRR Calculations

Cole Haan
  • Houston, TX
Posted

I am trying to calculate the IRR and need help. If I want to buy a commodity, for instance, and store it for 5 months, how do I calculate the IRR the market is currently pricing? For example, if I buy Corn for $4/bushel today and sell the forward price 5 months out for $4.25, what is the IRR on that? Tks for the help.

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Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
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Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
Replied

IMO an IRR calculation is not suitable for what you are doing. IRR assumes reinvestment of interim cash flows in projects with equal rates of return. I doubt this is the case for what you are doing.

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