Calculate the Internal Rate of Return (IRR) for any investment by entering your initial investment and up to 10 years of annual cash flows. The calculator returns the IRR percentage — the discount rate at which your net present value equals zero — along with a net present value summary and a visual breakdown of cumulative cash flows.
Internal Rate of Return (IRR)
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Net Present Value (NPV)
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Total Cash Inflows
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Net Profit (Inflows − Investment)
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Payback Period
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IRR is the discount rate that makes the Net Present Value (NPV) of all cash flows from an investment equal to zero. In other words, it represents the annualized rate of return you can expect from an investment over its lifetime. A higher IRR generally indicates a more attractive investment.
IRR is calculated by finding the discount rate (r) that satisfies the equation: NPV = 0, where NPV = –Initial Investment + CF₁/(1+r)¹ + CF₂/(1+r)² + ... + CFₙ/(1+r)ⁿ. Because this equation cannot be solved algebraically, IRR is found iteratively — the calculator uses Newton-Raphson iteration to narrow in on the correct rate.
A "good" IRR depends on the type of investment and the required rate of return (hurdle rate). Generally, an investment is considered worthwhile if its IRR exceeds your cost of capital or minimum acceptable return. For real estate, IRRs above 10–15% are often considered attractive; for private equity, targets can be 20% or higher.
IRR is a rate (percentage) representing the return of an investment, while NPV is a dollar amount representing the value added after discounting all cash flows at a given rate. IRR tells you the return; NPV tells you the absolute profit in today's dollars. Both metrics are complementary and should be used together for investment decisions.
IRR is widely used to evaluate and compare investment opportunities — from business projects and real estate deals to private equity and capital budgeting. Decision-makers compare the IRR against a hurdle rate: if IRR > hurdle rate, the investment is typically accepted. It allows comparison of projects of different sizes and durations on a common percentage basis.
Yes. A negative IRR means the investment is expected to lose money — the total discounted cash flows never recover the initial investment. This signals that the project destroys value and should generally be avoided or restructured.
IRR assumes that interim cash flows are reinvested at the same IRR rate, which may be unrealistic. It can also produce multiple solutions when cash flows alternate between positive and negative (non-conventional cash flows). For these reasons, Modified IRR (MIRR) and NPV analysis are often used alongside IRR for a more complete picture.
Enter your initial investment amount, select the number of annual periods, and fill in the expected cash flow for each year. Optionally enter a discount rate to see the NPV at that rate. The calculator will display your IRR, NPV, total inflows, net profit, and payback period, along with a cash flow chart and schedule table.