Test for valid sequence of cash flows before computing irr.

lib/finance/cashflows.rb

@@ -44,6 +44,12 @@ def values(x)
     # @see http://en.wikipedia.org/wiki/Internal_rate_of_return
     # @api public
     def irr
+      # Make sure we have a valid sequence of cash flows.
+      positives, negatives = self.partition{ |i| i >= 0 }
+      if positives.empty? || negatives.empty?
+        raise ArgumentError, "Calculation does not converge."
+      end
+
       func = Function.new(self, :npv)
       rate = [ func.one ]
       n = nlsolve( func, rate )

test/test_cashflows.rb

@@ -11,7 +11,9 @@ class TestCashflows < Test::Unit::TestCase
   context "an array of numeric cashflows" do
     should "have an Internal Rate of Return" do
       assert_equal D("0.143"), [-4000,1200,1410,1875,1050].irr.round(3)
+      assert_raises(ArgumentError) { [10,20,30].irr }
     end
+
     should "have a Net Present Value" do
       assert_equal D("49.211"), [-100.0, 60, 60, 60].npv(0.1).round(3)
     end