IRR Calculator
Find the internal rate of return and NPV of an irregular cash flow series.
About IRR Calculator
The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of a cash flow series equal to zero. In plain terms: it's the annualized return rate of an investment assuming all cash flows are reinvested at the same rate. A project is worth pursuing when IRR exceeds your cost of capital (hurdle rate). NPV, computed at your chosen discount rate, tells you whether the investment adds value in today's dollars. Positive NPV = value-creating; negative NPV = value-destroying at your cost of capital.
Formulas
NPV
NPV = Σ Cash Flow_t / (1 + r)^t
- C_t
- Cash flow at time t
- r
- Discount rate (decimal)
- T
- Final period
IRR definition
IRR is the rate r where NPV = 0
Worked example
With the default values below, IRR Calculator returns Internal Rate of Return of 17.09%. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Cash Flows (one per line or comma-separated)
- -100000 30000 35000 40000 45000
- Discount Rate for NPVaccepts 0–500 %
- 10 %
Results
- Internal Rate of ReturnThe discount rate that makes NPV = 0.
- 17.09%
- NPV at Discount RatePositive = investment exceeds hurdle rate.
- $16,986.54
- Total Undiscounted Inflows
- $150,000.00
- Total Undiscounted Outflows
- $100,000.00
- Number of Periods
- 4
Step by step
- 1Number of periods= 4
- 2Total undiscounted inflows= $150,000.00
- 3Total undiscounted outflows= $100,000.00
- 4NPV at 10.0% discount rate= $16,986.54Positive NPV: the investment exceeds your hurdle rate.
- 5IRR= 17.09%The discount rate at which NPV = 0.
Assumptions and limits
- The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or compounding frequency into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
Why might IRR not converge?
Some cash flow patterns have multiple sign changes (e.g., negative-positive-negative). Such series can have multiple IRRs, and bisection may find any one of them or none. If you get a convergence error, check that you have exactly one sign change, or use the Modified IRR (MIRR) approach which avoids the multiple-root problem.
What should my IRR be compared against?
Compare IRR against your hurdle rate — typically your weighted average cost of capital (WACC) or the return you could earn on an alternative investment of similar risk. If IRR > hurdle rate, the project adds value.
What's the difference between IRR and CAGR?
CAGR measures the return on a single investment with a beginning and ending value. IRR handles irregular, multi-period cash flows — including cases where you invest in multiple tranches or receive income at uneven intervals. For a single lump-sum investment and exit, IRR and CAGR will be identical.
Does IRR assume intermediate cash flows are reinvested?
Yes — IRR implicitly assumes all intermediate inflows are reinvested at the IRR rate. For high-IRR projects (e.g., 40%), this assumption is often unrealistic. MIRR (Modified IRR) corrects for this by using the cost of capital as the reinvestment rate.