Work out internal rate of return (property) instantly with clear inputs, formula shown and shareable results.
The internal rate of return is the discount rate at which the present value of all cash flows equals zero. With an initial equity outflow, level annual cash flow and a terminal sale, there is no closed form solution, so the rate is found by bisection. Net present value at ten percent is shown alongside as a sanity check against a target hurdle.
IRR
The rate r where -equity + sum of cash flow / (1 + r)^t = 0
Equity multiple
Multiple = total cash returned / equity invested
The rate r where -equity + sum of cash flow / (1 + r)^t = 0. The internal rate of return is the discount rate at which the present value of all cash flows equals zero.
It assumes interim cash flows are reinvested at the IRR itself, which is rarely achievable. It also rewards short holds disproportionately, so it should always be read with the equity multiple.
This calculator takes 4 inputs: Initial equity investment, Annual net cash flow, Net sale proceeds, Holding period. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.