About the IRR Calculator
This IRR calculator finds the internal rate of return of a series of cash flows — the discount rate at which the net present value is exactly zero. Enter the initial investment as a negative number followed by each period’s cash flow (positive for money received, negative for extra money put in), and you get the IRR, the NPV at your chosen discount rate, the payback period and the money multiple.
Use it to evaluate a rental property, a business project, a private deal, an equipment purchase or any investment with uneven cash flows. If the IRR is higher than your required return (your hurdle rate or cost of capital), the NPV is positive and the investment adds value.
Cash flows are assumed to be evenly spaced — yearly, quarterly or monthly — with the first value at time zero. For irregular dates, use the XIRR calculator. Enter plain numbers without thousands separators.
With the default inputs, the irr (annual) is 16.34%. Change any value above to recalculate instantly.
How to use the irr calculator
- 1Enter the initial investment as a negative number first.
- 2Add each following period’s net cash flow in order, including the final sale or exit value.
- 3Choose whether the periods are years, quarters or months.
- 4Enter your required return to calculate NPV.
- 5Compare the IRR with your hurdle rate and check the payback period.
Formula and method
The internal rate of return is the rate that makes the present value of all cash flows sum to zero. There is no algebraic solution for more than a few periods, so the calculator finds it numerically: it scans a wide range of rates for the point where NPV changes sign and then narrows it down by bisection (spreadsheet IRR functions use a similar iterative search). If cash flows change sign more than once and several IRRs exist, the lowest one is reported. For monthly or quarterly flows, the per-period IRR is compounded into an effective annual rate: (1 + IRR_period)^k − 1.
NPV discounts every cash flow back to time zero at your required return, converted to the matching per-period rate. The payback period is when cumulative cash flow first turns positive, interpolated within the period. MOIC is total inflows divided by total outflows, ignoring timing.
- CFₜ
- Cash flow in period t (negative = money out)
- IRR
- Internal rate of return per period
- r
- Discount rate per period
- n
- Number of periods after the initial one
Worked examples
$10,000 project returning $3,000, $4,200 and $6,800
The IRR is about 16.34% a year, well above the 10% discount rate, so the NPV is a positive $1,307.29. You recover the $10,000 about 41% of the way through year three, and the project returns 1.4× the money invested.
Business investment over five years at an 8% hurdle
Investing $50,000 and receiving growing cash flows over five years yields an IRR of about 15.48%. Discounted at 8% the project is worth $10,501.63 more than it costs, and it pays back in roughly 3.2 years.
Monthly payments: $5,000 in, $500 back for 12 months
The monthly IRR is about 2.92%, which compounds to an effective annual rate of roughly 41.3% — far higher than the 20% simple profit suggests, because the money comes back quickly.
Frequently asked questions
What is a good IRR?+
An IRR is good when it is higher than your cost of capital or the return you could earn elsewhere at similar risk. Many companies use hurdle rates of 10–15%, while private equity and venture investors often target 20% or more.
What is the difference between IRR and NPV?+
NPV gives a dollar amount of value created at a chosen discount rate, while IRR gives the break-even rate at which NPV is zero. When comparing mutually exclusive projects of different sizes, NPV is usually the more reliable guide.
What is the difference between IRR and XIRR?+
IRR assumes cash flows occur at equal intervals such as every year. XIRR accepts an exact date for every cash flow, which is better for real investments with irregular deposits and withdrawals.
Why can a project have more than one IRR?+
When cash flows switch between negative and positive more than once — for example a large clean-up cost at the end — the NPV curve can cross zero several times, producing multiple IRRs. In that case, use NPV or the modified IRR (MIRR).
How do I calculate IRR in Excel or Google Sheets?+
Put the cash flows in a column with the initial investment first, then use =IRR(A1:A6). For monthly flows, annualize with =(1+IRR(A1:A13))^12-1, which is what this calculator reports as the annual IRR.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.