IRR Calculator
Calculate the internal rate of return from a series of cash flows. Enter the initial outlay and each period return for the annualized IRR.
Independently verified for accuracy
Calculator by Toolsloft ↗- Internal rate of return
- 23.38%
Find the internal rate of return for a series of cash flows, starting with the money you put in and followed by what comes back each period. IRR is the discount rate that makes the net present value of the whole series zero, which gives you one annualized return figure for an uneven set of payments.
How this is calculated
The tool solves for the rate where the net present value equals zero, NPV = sum of CF_t / (1 + r)^t for t from 0, using bisection between -99.9999% and 10,000%. The series needs at least one negative and one positive cash flow so a sign change brackets the rate.
How to use
- Enter the initial investment as a negative number.
- Enter each period cash flow that follows, one per period.
- Read the internal rate of return as a percent.
Examples
- -$1,000 then 500, 500, 500:
IRR 23.38% - -$10,000 then 3,000, 4,200, 6,800:
IRR 16.34%
FAQ
- What is the internal rate of return?
- It is the discount rate at which an investment breaks even, meaning the present value of the returns equals the money invested. A higher IRR means a more attractive return.
- Why do I need a negative cash flow?
- IRR is the rate that balances money out against money in. Without at least one outlay (negative) and one return (positive), there is no break-even rate to solve for.
- Can a cash-flow series have more than one IRR?
- Yes, when the sign of the cash flows changes more than once there can be multiple rates that zero the NPV. This calculator returns the first rate it brackets, which is the standard answer for a conventional outlay-then-returns series.