ROI vs IRR Calculator – Compare Both Return Metrics
Use this free calculator to compare ROI (return on investment) and IRR (internal rate of return) for your investments. For a single investment with one payoff, IRR equals the annualised growth rate (CAGR).
ROI vs IRR Calculator
Compare ROI (return on investment) with IRR (internal rate of return). For a single investment with one payoff, IRR equals the annualised growth rate (CAGR).
How ROI and IRR differ
ROI is simple: (Final value − Initial value) ÷ Initial value × 100. It ignores how long you held the investment. IRR is the discount rate that makes the net present value of all cash flows equal to zero. For one initial outflow and one final inflow, IRR equals CAGR.
ROI = (Final − Initial) ÷ Initial × 100
IRR (simple case) = (Final ÷ Initial)1/years − 1
When to use ROI and when to use IRR
ROI is widely used because it is easy to understand and calculate. It answers the question: how much did I make relative to what I put in? For quick comparisons of total profit, ROI works well. However, it does not account for time. A 50% ROI over 1 year is very different from 50% over 10 years.
IRR converts your return into an annualised rate, making it easier to compare investments held for different periods. It also accounts for the timing of cash flows when you have multiple inflows and outflows. For complex investments with irregular cash flows, IRR is the preferred metric.
This calculator handles the simple case: one initial investment and one final value. In that scenario, IRR equals CAGR. Use our ROI calculator for quick profit checks and our CAGR calculator for annualised returns. This tool runs in your browser and does not store your data.