IRR Calculator
Solve for the internal rate of return that sets the net present value of cash flows to zero.
Guide
What is internal rate of return?
Internal rate of return (IRR) is the discount rate that makes the net present value of a cash-flow series equal zero. It is one way to summarize multi-period return when cash flows are irregular.
Formula
IRR is the rate r that satisfies Sum of Cash flow at time t รท (1 + r) ^ t = 0 across the entered periods. The Calculator reports r as a percent.
Worked example
Cash flows of -1,000, 400, 400, and 400 have an IRR of about 9.7%. Cash flows of -100 and 110 have an IRR of 10%.
Assumptions and limitations
The Calculator assumes evenly spaced periods and searches for a single real root. Multiple sign changes can produce multiple IRRs; this Tool returns one root in the searchable range or reports that no IRR was found.
Common questions
How is IRR different from CAGR?
CAGR uses a starting value and ending value only. IRR uses the full cash-flow series. Why must signs change? Without both an outflow and an inflow, NPV cannot cross zero in the usual IRR model.
Methodology
The Calculator parses cash flows, searches for a rate that drives NPV to approximately zero with decimal arithmetic, and rounds only the displayed percent.