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IRR Calculator

The internal rate of return is the yearly rate an investment effectively earns, taking the timing of every cash flow into account. Enter the upfront cost and the cash received each year, and the calculator finds the discount rate at which the net present value is exactly zero.

Quick examples
$

Paid today (year 0). Enter it as a positive number.

One per year, separated by commas or spaces, no thousands separators. Include the sale value in the final year.

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Internal rate of return18.03%
Net cash gain
$5,000.00
Cash returned per $1 invested
1.5 ×
Years of cash flow
4

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      Formula

      IRR is the rate r that solves: 0 = −initial investment + CF₁ ÷ (1 + r) + CF₂ ÷ (1 + r)² + … + CFₙ ÷ (1 + r)ⁿ
      There is no algebraic solution for more than a couple of cash flows, so the rate is found by repeatedly narrowing the range in which NPV changes sign

      How to use it

      1. Enter the initial investment as a positive number.
      2. List each year’s net cash flow in order; include the sale or residual value in the last year.
      3. Compare the IRR with your required return: higher means the investment clears the bar.

      Worked examples

      $1,000 invested that returns $1,100 one year later

      Internal rate of return
      10%
      Net cash gain
      $100.00
      Cash returned per $1 invested
      1.1 ×
      Years of cash flow
      1

      $1,000 invested, nothing in year 1, $1,210 back in year 2

      Internal rate of return
      10%
      Net cash gain
      $210.00
      Cash returned per $1 invested
      1.21 ×
      Years of cash flow
      2

      $10,000 invested for returns of $3,000, $4,000, $5,000 and $3,000

      Internal rate of return
      18.03%
      Net cash gain
      $5,000.00
      Cash returned per $1 invested
      1.5 ×
      Years of cash flow
      4

      What IRR does and does not tell you

      IRR lets you compare investments of different sizes and lengths on one scale. It assumes interim cash can be reinvested at the same rate, which flatters projects with very high IRRs, and it ignores scale: 40% on $1,000 is worth less than 15% on $1,000,000. Use it together with NPV.

      When cash flows change sign more than once — an outflow in the middle or at the end — there can be more than one IRR or none. This calculator reports the lowest rate it finds above −99%, and shows no result if the cash flows never repay the investment. Cash flows are treated as yearly; for irregular dates use a spreadsheet’s XIRR function.

      Questions people ask

      How do I calculate IRR?

      Find the rate that makes NPV zero. For one cash flow it is simple: $1,000 that returns $1,100 after a year has an IRR of 10%. For several, it takes trial and error or a calculator.

      What is the IRR of $10,000 returning $3,000, $4,000, $5,000 and $3,000?

      18.03% a year. At an 8% discount rate the same cash flows have an NPV of $2,381.38.

      What is the difference between IRR and ROI?

      ROI is total gain over cost and ignores time; IRR is a per-year rate that accounts for when each dollar arrives. Doubling $1,000 in five years is a 100% ROI but a 14.87% IRR.

      Related calculators

      NPV CalculatorNet present value of an upfront cost and a list of yearly cash flows.ROI CalculatorReturn on investment as a percentage, a dollar gain and a yearly rate.CAGR CalculatorCompound annual growth rate between a starting and ending value.Payback Period CalculatorYears to earn back an investment, plain and discounted.Present Value CalculatorWhat a future sum or stream of payments is worth today.