IRR Calculator (Internal Rate of Return)
Find the internal rate of return — the annualized return that makes an investment’s net present value zero. Enter the cost and annual cash flows to get the IRR, benchmarked to a typical hurdle rate.
Example: with Initial investment $100,000 · Mode Equal annual cash flow · Annual cash inflow $25,000 · Years 6 yrs → Internal rate of return: 13.0%.
- Undiscounted profit$50,000
- vs a typical hurdle rateWell above a typical 8–12% hurdle
- NPV at your discount rate$8,882
Computed by the calculator below using its default values. Change any input to see your own numbers.
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Learn moreWhat IRR tells you
IRR is the discount rate at which an investment’s inflows exactly offset its cost — effectively its annualized compound return. The decision rule: accept a project when its IRR exceeds your hurdle rate (your required return or cost of capital). IRR is great for ranking opportunities, but for mutually exclusive projects it can disagree with NPV; when they conflict, follow NPV.
How it’s calculated & sources
IRR is the rate r that makes −investment + Σ cash flow ÷ (1+r)^t + salvage ÷ (1+r)^n = 0. Solved numerically (bisection) for equal annual cash flows. Compared to a typical 8–12% hurdle rate. Switch Mode to “Custom yearly cash flows” to model irregular/uneven cash flows — add or remove a row for each year and the same bisection solver finds the IRR for those exact amounts. A separate NPV output discounts either mode’s cash flows at a discount rate you choose, showing the dollar value added at that rate alongside the IRR.
Benchmark: accept when IRR exceeds your hurdle rate / cost of capital — commonly 8–12% for business projects.
Results update as you type and are general estimates, not personalized advice. Verify with a professional.
Frequently asked questions
IRR vs NPV — which wins?
NPV, when they disagree on mutually exclusive projects. IRR can mislead with unusual cash-flow timing; NPV always reflects dollar value added.
What is a good IRR?
One above your hurdle rate. For many businesses that means beating an 8–12% cost of capital; higher is better for the risk.
Does this handle uneven cash flows?
Yes — switch Mode to “Custom yearly cash flows” and enter a different amount for each year using the add/remove-year rows. IRR is then solved from those exact irregular flows instead of assuming one equal annual amount.
Can I enter uneven cash flows?
Yes. Set Mode to “Custom yearly cash flows” and use the Add year / × buttons to build a row for each year’s cash flow, then IRR and the new NPV output both recompute from your exact year-by-year amounts.