IRR Calculator – Internal Rate of Return
Calculate the Internal Rate of Return (IRR) for a series of cash flows at regular intervals. Enter each period's cash flow. Useful for project evaluation, investment analysis, and comparing returns.
IRR Calculator
Calculate the internal rate of return (IRR) for a series of periodic cash flows. First value is typically the initial investment (negative); rest are returns.
IRR formula
IRR is the rate r where: NPV = Σ (CF_t / (1+r)^t) = 0. The calculator uses Newton-Raphson iteration to find r. First cash flow (t=0) is usually negative (investment).
Understanding IRR and project evaluation
The Internal Rate of Return (IRR) is a key metric in capital budgeting and investment analysis. It answers: what annual return does this investment effectively deliver? If the IRR exceeds your required return (cost of capital), the project is attractive. If it is below, you might reject it.
To calculate IRR, you need a series of cash flows. The first is typically the initial investment (negative). Subsequent flows are returns or additional investments. The calculator finds the discount rate that makes the net present value zero. For multiple IRRs (possible with alternating sign changes), the result may be ambiguous; in practice, most investments have a single meaningful IRR.
IRR has limitations. It assumes reinvestment at the IRR rate, which may not be realistic. It can mislead when comparing projects of different sizes or durations. Use NPV for absolute value and IRR for relative comparison. Our IRR calculator works with regular periodic cash flows; for irregular dates, use the XIRR calculator instead.