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Internal Rate of Return (IRR) Calculator

Calculate the Internal Rate of Return for an investment using fixed or variable cash flows. Get your IRR instantly with NPV, cash-flow and payback information.

Calculate Your IRR
Enter the amount invested at the beginning.
Enter the cash received each year.
Use positive numbers for inflows and negative numbers for additional outflows.
Results update automatically as you type.
Your IRR Results
Internal Rate of Return
14.96%
Annualized internal rate based on your cash flows.
Initial Investment 10,000.00
Total Cash Inflows 15,000.00
Net Cash Flow 5,000.00
NPV at IRR 0.00
Payback Period 3.33 years
Cash Flow Periods 5
Your IRR is calculated from the cash flows entered above.

What Is an Internal Rate of Return (IRR)?

The Internal Rate of Return (IRR) is a financial metric used to estimate the annualized rate of return generated by a series of investment cash flows.

IRR is the discount rate at which the Net Present Value (NPV) of an investment’s cash flows equals zero.

IRR Formula

The mathematical definition of IRR can be represented as:

0 = CF₀ + CF₁/(1+r)¹ + CF₂/(1+r)² + … + CFₙ/(1+r)ⁿ

How to Use the IRR Calculator

  1. Enter your initial investment.
  2. Choose fixed or variable cash flows.
  3. Enter the expected cash flows.
  4. Enter the investment period when using fixed cash flows.
  5. The calculator automatically calculates IRR while you type.
  6. Review IRR, NPV, cash flow and payback information.

IRR vs CAGR vs ROI

IRR, CAGR and ROI are all used to evaluate investment performance, but they are designed for different situations.

IRR

IRR considers a series of cash flows and the timing of those cash flows.

CAGR

CAGR measures the annualized growth between a beginning value and an ending value over a defined period.

Calculate CAGR with the 5iTech CAGR Calculator →

ROI

ROI generally compares an investment gain or loss with the amount invested.

Calculate ROI with the 5iTech ROI Calculator →

IRR vs XIRR

Traditional IRR assumes that cash flows occur at regular intervals, such as every year.

XIRR is designed for cash flows that occur on specific dates. It can therefore be useful for investments with irregular deposits, withdrawals or distributions.

Important IRR Considerations

  • IRR should not be considered in isolation when evaluating an investment.
  • Different investment sizes can produce different conclusions even when their IRRs are similar.
  • Multiple changes between positive and negative cash flows can produce multiple IRRs.
  • IRR does not directly show the absolute amount of money created by an investment.
  • NPV and other financial measures can provide additional information for investment analysis.

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Frequently Asked Questions About IRR

What is an IRR calculator?
An IRR calculator calculates the internal rate of return for a series of investment cash flows.
How is IRR calculated?
IRR is the rate at which the net present value of the investment cash flows equals zero. Numerical methods are used to find the rate.
Can IRR be negative?
Yes. Depending on the cash-flow pattern, an investment can have a negative IRR.
Can an investment have multiple IRRs?
Yes. Multiple IRRs can occur when cash flows change between positive and negative values more than once.
What is the difference between IRR and CAGR?
CAGR describes annualized growth between beginning and ending values, while IRR considers multiple investment cash flows and their timing.
What is the difference between IRR and XIRR?
IRR assumes regular periods, while XIRR is designed for cash flows occurring on specific dates.
Does this calculator use a currency symbol?
No. This calculator intentionally uses plain numbers without a currency symbol, making it suitable for users working with different currencies.
This calculator provides estimates based on the information entered. Results should not be considered financial advice.