IRR Calculator
Calculate the Internal Rate of Return (IRR) for a series of cash flows. Enter your initial investment as a negative value followed by expected future cash inflows to find the rate at which the net present value equals zero.
IRR Calculator
Enter the initial investment as a negative value, followed by future cash inflows separated by commas.
FAQ
What is the Internal Rate of Return (IRR)?
IRR is the discount rate that makes the NPV of all cash flows from a project equal to zero. It represents the annualized effective compounded return rate an investment is expected to generate.
How do I use IRR to make investment decisions?
Compare the IRR to your required rate of return (hurdle rate). If the IRR exceeds the hurdle rate, the project may be worth pursuing. When choosing between projects, a higher IRR is generally more attractive, though NPV should also be considered.
What are the limitations of IRR?
IRR assumes cash flows are reinvested at the IRR itself, which may be unrealistic. It can also produce multiple values for non-conventional cash flows (those that change signs more than once). For mutually exclusive projects, NPV is generally a better metric.