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IRR Calculator

Calculate the Internal Rate of Return for an investment with an initial outlay and a series of future cash flows — the annualized return rate that makes the investment break even in present-value terms.

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Cash Flows

Result


Enter your cash flows to calculate IRR
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Disclaimer: This calculator provides an estimate for educational purposes only and is not investment advice. IRR has known limitations (e.g. multiple roots with non-conventional cash flows) and should be used alongside NPV and other metrics. Consult a licensed financial advisor before making investment decisions.

About the IRR Calculator

The Internal Rate of Return (IRR) is the discount rate at which the net present value (NPV) of a series of cash flows equals zero. It represents the annualized effective return an investment is expected to generate.

How It Works

This tool uses bisection search to find the rate that zeroes out the NPV equation: initial investment (negative) plus each future cash flow discounted back to present value. It searches between -99% and 1000% return to isolate the root.

Interpreting IRR

Compare IRR to your required rate of return or cost of capital: if IRR exceeds that hurdle rate, the investment is generally considered attractive. IRR is most reliable for conventional cash flows (one outflow followed by inflows); investments with alternating positive and negative flows can have multiple mathematically valid IRRs, in which case NPV analysis is more reliable.

Frequently Asked Questions

It depends on the investment type and your cost of capital. Many investors compare IRR against a hurdle rate (e.g. 10-15% for equity investments); anything above that is generally attractive, though risk and liquidity also matter.
ROI measures total return over the life of an investment without accounting for time. IRR is time-weighted — it accounts for when cash flows occur, making it better for comparing investments with different timelines.
Yes. A negative IRR means the investment is expected to lose value in present-value terms — the cash flows returned don't compensate for the time value of money on the initial investment.
With non-conventional cash flows (multiple sign changes), the IRR equation can have more than one valid root, or none. In those cases, NPV at your actual cost of capital is a more reliable metric.
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