IRR Calculator (Internal Rate of Return)
Internal rate of return (IRR) is the discount rate at which the present value of an investment's cash flows equals its cost. Enter the initial outlay and each year's cash flow, separated by commas.
Enter your figures below. Results update as you type.
Internal rate of return17.44%
- NPV at 8%
- $2,185.34
- Total cash returned
- $14,700.00
- Net profit
- $4,700.00
| Year | Cash flow | Cumulative |
|---|---|---|
| 0 | -$10,000.00 | -$10,000.00 |
| 1 | $3,000.00 | -$7,000.00 |
| 2 | $4,200.00 | -$2,800.00 |
| 3 | $5,000.00 | $2,200.00 |
| 4 | $2,500.00 | $4,700.00 |
How the IRR calculation works
0 = -initial investment + sum of cash flow(t) / (1 + IRR)^t
The calculator also reports net present value at a discount rate you choose. A project is generally worth pursuing when its IRR exceeds your required return, or equivalently when NPV is positive.
Frequently asked questions
Can I enter negative cash flows?
Yes. Type a minus sign before any year with a net outflow. Projects whose cash flows change sign more than once can have more than one IRR.
How do I calculate IRR?
IRR is the discount rate at which the present value of all the cash flows equals the initial investment. It cannot be solved directly, so it is found by testing rates until the net present value is zero, which is what this calculator does.
How do I calculate IRR in Excel?
List the cash flows in a column, with the initial investment as a negative number in the first cell, and use =IRR(range). For flows that are not a year apart, use =XIRR(values, dates).
What is a good IRR?
One that is comfortably above your cost of capital or the return you could earn elsewhere at similar risk. The right hurdle depends on the investment: a low-risk property might be acceptable at 8%, while a venture investment would need much more.
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