Internal Rate of Return (IRR) Calculator
Calculate your investment’s internal rate of return for both fixed recurring cash flows and variable annual cash flows. Make informed financial decisions with our accurate IRR calculator.
About IRR
The Internal Rate of Return (IRR) is a financial metric used to estimate the profitability of potential investments. It’s the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
When to Use IRR
- Evaluating capital budgeting decisions
- Comparing investment opportunities
- Analyzing real estate investments
- Assessing business expansion projects
Limitations
IRR doesn’t account for project size, future costs, or the reinvestment rate. For non-annual cash flows, consider using our Average Return Calculator.
Calculate Your IRR
Your Investment’s IRR:
The internal rate of return represents the annualized effective compounded return rate.
Annual Cash Flows (Inflows)
Your Investment’s IRR:
The internal rate of return represents the annualized effective compounded return rate.
Understanding Your IRR Results
Interpreting your Internal Rate of Return is crucial for making sound investment decisions. Here’s how to evaluate your results:
IRR > Required Rate
If the calculated IRR exceeds your required rate of return or cost of capital, the investment is generally considered profitable. This indicates potential for positive returns.
IRR = Required Rate
When IRR equals your required rate, the investment breaks even in terms of your expectations. You might consider other qualitative factors for decision-making.
IRR < Required Rate
An IRR below your required rate suggests the investment may not meet your financial objectives. Proceed with caution and consider alternative opportunities.