To calculate the APR, the software:
- first tries to determine the unit period as defined by the selected methods,
- then it sets the fractions based on the unit period, and
- finally it solves for an APR in the range 0% to 100 % up to a precision of 6 digits
This process may fail for different reasons, and an appropriate error message will be displayed.
Below are the possible error messages and how to resolve them:
No data
This one is obvious, if there is no data, there is nothing to calculate.
You will always see this error when you just created a new empty document or after deleting all items.
solution: Add data either manually or by importing them.
No sign changes
The no sign changes error indicates that all data items have either positive or negative amounts.
The total NPV column will display the same sign for all items. Forgetting to enter the credit amount as a negative value usually causes this error.
solution: Verify the data items to see where you forgot to use the appropriate sign and edit the item or add missing items.
Multiple sign changes
When there is just one sign sign change, there is one solution which may be in or out of the range of rates that the software uses (0 % to 100 %).
A cash flow may be irregular, meaning that for example there may be inflows, followed by outflows, then inflows, followed by outflows, and so on.
US Example 7.1 Student loan is an example of such a cash flow.
When a cash flow has multiple sign changes, there are probably multiple solutions, usually there is one more or less realistic value, along with other extreme values.
The software will display the first value it finds.
note: When the cash flow is too irregular there may be no solution at all, resulting in the Maximum iterations reached error.
APR less than 0 %
When the total of inflows is less than the total of outflows, the finance charge is negative, causing the APR to be less than zero.
The software will display the total NPV using a rate of 0 %.
solution: Check the data items for mistakes.
If you want to know the negative APR, save a copy and change the signs of both payments and advances.
APR more than 100 %
For some situations the APR may be higher than 100 %. If so, the software will calculate the NPV values using a rate of 100 %.
solution: Check the data items for mistakes.
Maximum iterations reached
The software uses an iterative algorithm that adjusts the APR in each loop until it finds a solution with a precision of six digits.
Usually the number of itearations is well below the maximum, but there may be situations in which the maximum is reached. If so, the value from the last iteration will be used.
note: Check the Total NPV for the last item in the table to find out if it is equal to or near zero. If so, the APR may be an acceptable value, as the APR only needs to be accurate up to two digits.