IRR Calculator
Cash Flows by Year
Internal Rate of Return
0%
Enter Year 0 as a negative number (the initial outlay). IRR assumes cash flows are reinvested at the same rate.
Internal Rate of Return (IRR) is the annualised rate of return at which a series of cash flows breaks exactly even in present-value terms — in other words, the discount rate that makes NPV equal to zero.
IRR is widely used to compare projects or investments of different sizes and durations on a single, comparable annual percentage, making it easier to judge alongside a target return or hurdle rate.
How This Calculator Works
IRR is the rate r that solves Σ [CFt / (1+r)t] = 0. There's no algebraic formula for this — it's found by testing rates iteratively until the result converges, exactly as this calculator does.
Frequently Asked Questions
What's a good IRR?
It depends entirely on context — compare it to your cost of capital or the return available from alternative investments of similar risk. A higher IRR is generally better, all else equal.
Can a set of cash flows have more than one IRR?
Yes, in unusual cases where cash flows change sign more than once (e.g. negative, positive, then negative again), there can be multiple mathematically valid IRRs. This calculator returns the first solution found; treat unusual cash flow patterns with extra care.