IRR Calculator
Find the internal rate of return of a series of cash flows.
About the IRR Calculator
Enter the cash flows year by year, starting with the investment as a negative number. The calculator finds the IRR and charts NPV against the discount rate, so you can see where it crosses zero.
IRR is the discount rate that makes the net present value of all cash flows zero: the project's own yearly return. Compare it with your cost of capital. Cash flows that change sign more than once can have several IRRs; then rely on NPV.
The formula
Find r such that Σ CFₜ ÷ (1 + r)ᵗ = 0
Worked example
Invest 100,000; receive 30,000, 35,000, 40,000 and 45,000
- At 10% the NPV is +16,987, so the IRR is higher
- NPV is zero at 17.09%
- IRR = 17.09%
Questions people ask
IRR or NPV?
NPV is more reliable for comparing projects of different sizes; IRR is easier to communicate.
What about irregular dates?
Use XIRR (see the XIRR calculator) for dated cash flows.
Is a higher IRR always better?
Not always: a small project with a high IRR can add less value than a large one with a lower IRR.