IRR calculator

How to calculate it

0 = −initial investment + Σ cash flow[t] / (1 + IRR)^t

IRR is a discount rate that makes net present value equal zero. It accounts for when cash is returned, so two investments with the same total proceeds can have different IRRs. The periods must be equally spaced.

Reference: Microsoft: IRR for cash flows at regular intervals.

Worked example

Invest 10,000 today and receive 3,000, 4,000, and 5,000 at the end of the next three periods. IRR is 8.8963%, displayed as 8.90% per period. Discounting those proceeds at the unrounded rate gives a present value of 10,000.

Assumptions and limits

• The initial investment is a positive input representing an outflow at time 0. Later receipts are positive. Keep periods with no payment in the list as 0.
• Annual cash flows produce an annual IRR. Monthly cash flows produce a monthly IRR. To convert a monthly IRR to an effective annual rate, use (1 + monthly IRR)^12 − 1; multiplying by 12 gives a different measure.
• This tool solves cash-flow patterns with one change of sign. Patterns that change signs more than once can have multiple or no IRRs and are rejected with an explanation. For example, −100, +230, −132 has both 10% and 20% IRR. Use NPV to compare such investments at a chosen rate.
• This is periodic IRR, not dated XIRR. Actual irregular payment dates require XIRR. Results exclude any taxes or fees not already reflected in the cash flows.

Results use unrounded inputs and normally display two decimal places. Very small or large numbers may use scientific notation. Use consistent currency units; no currency conversion is applied.

Common questions