Internal Rate of Return (IRR) Calculator

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Internal Rate of Return (IRR) Calculator

Internal Rate of Return is the discount rate at which the Net Present Value (NPV) of an investment becomes zero. It represents the expected rate of return of the investment. More info →

Input

Initial Investment

Required Rate Of Return (%) Used for investment accept/reject decision

Cash Flow Pattern Regular Cash Flows: Cash inflows occur at consistent intervals
Irregular Cash Flows: Cash flows vary in timing

Cash Flow Type

Annual Cash Flow

Project Life (Years)

Enter investment details to calculate IRR.

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How This Calculator Works

IRR is the annual return an investment earns on its own cash flows. The calculator searches for the discount rate that makes the NPV of your cash flows exactly zero, then compares it with your required rate of return to suggest whether to accept or reject the project.

The Formula

0 = −Initial Investment + ∑ CF_t / (1 + IRR)^t

CF_t = cash flow in year t · IRR = the rate that solves the equation

What Each Input Does

Initial Investment: The upfront cost at year 0, treated as a cash outflow.
Required Rate of Return (%): Your hurdle rate. It does not change the IRR; it is only used for the accept/reject decision.
Cash Flow Pattern: Regular – one cash flow per year, received at the end of each year.
Irregular (XIRR) – cash flows on specific dates, timed by the exact days since the earliest date (days ÷ 365).
Cash Flow Type (Regular only): Fixed – the same annual cash flow for the project life you enter.
Variable – a different amount for each year, in order.

Step by Step

The initial investment and your cash flows are lined up by year (or date).
The calculator tries discount rates between −90% and 1,000%, narrowing in until the NPV is zero.
That rate is the IRR, shown to 2 decimals.
The IRR is compared with your required rate of return.

Reading the Result

IRR above required rate – accept, the project beats your hurdle.

IRR at or below required rate – reject, it may not be attractive.

If cash flows switch between positive and negative more than once, more than one IRR can exist and a warning is shown.

Quick Example

Initial investment 100,000, required rate 10%, fixed annual cash flow of 30,000 for 5 years. The rate that brings the NPV to zero is IRR = 15.24%. Because 15.24% is above 10%, the project is accepted.