Find the internal rate of return for an investment’s cash flows.
Calculated instantly in your browser.
How is the internal rate of return (IRR) calculated?
IRR is the rate r that solves 0 = −initial + Σ (cash flowₜ ÷ (1 + r)ᵗ) — the discount rate at which net present value equals zero — found numerically by searching for the rate that makes NPV zero. An initial 1,000 returning 500 a year for three years has an IRR of about 23.4%. If the IRR beats your required return, the investment is generally worth pursuing.
Understanding your result
If the IRR is higher than your required rate of return, the investment is generally worth pursuing. IRR ignores scale, so pair it with NPV for big decisions.
Formula and method
IRR is the rate r that solves 0 = −initial + Σ (cash flowₜ ÷ (1 + r)ᵗ). It is found numerically by searching for the rate that makes NPV zero.
Assumptions and limitations
Unconventional cash flows (sign changes) can have multiple or no IRR. The tool reports a single rate when one clear solution exists.
Worked example
An initial 1,000 returning 500 a year for three years has an IRR of about 23.4%.
How to use this tool
- Enter the initial investment as a positive amount.
- List each future cash flow, one per line.
- Read the internal rate of return.
Common mistakes to avoid
- Entering the initial investment again inside the cash-flow list.
- Relying on IRR alone when comparing projects of very different sizes.
About the IRR Calculator
The IRR Calculator finds the internal rate of return — the single discount rate at which an investment’s net present value equals zero. It is a quick way to express a project’s return as one percentage.
Who should use this tool
Investors and analysts comparing the return of projects with different cash-flow patterns.
Benefits
- Express an investment’s return as a single rate.
- Compare projects against your required return.
- Handles uneven, multi-year cash flows.
- Private and instant — no sign-up.
Practical use cases
- Ranking competing investment opportunities.
- Checking whether a return beats your hurdle rate.
- Summarising a cash-flow forecast as one number.
Frequently asked questions
What is a good IRR?
Any IRR above your required rate of return (hurdle rate) is generally attractive; the right threshold depends on the risk and your alternatives.
Why might there be no IRR?
If the inflows never exceed the initial investment, or the cash flows change sign several times, a single IRR may not exist.