💰 Finance & Investing

Internal Rate of Return (IRR) Calculator

Calculate IRR for any series of cash flows. Free IRR calculator for projects, investments, and real estate.

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What This Calculator Tells You

The internal rate of return (IRR) is the annual return a project or investment earns, taking into account when each dollar comes in or goes out. Technically, it is the discount rate at which the net present value of all cash flows equals zero.

Enter the cash flows in order, starting with the initial investment as a negative number. The calculator solves for IRR so you can compare it with your required return or cost of capital.

What to Enter

Cash flows incl. t=0 — a comma-separated list, one value per period, in order. The first value is usually the upfront cost entered as a negative (e.g. −100000). Later values are net cash in (positive) or out (negative) for each year. Use 0 for periods with no cash flow.

Worked Examples

1. Equipment that pays back over four years

Cost $100,000, then net savings of $30,000, $35,000, $40,000 and $45,000.

Enter −100000, 30000, 35000, 40000, 45000 → IRR about 17.1%.
If your cost of capital is 10%, the project clears the bar comfortably.

2. A property bought and sold

Buy for $250,000, no net income for four years, sell for $420,000 at the end of year 5.

Enter −250000, 0, 0, 0, 0, 420000 → IRR about 10.9%.
The 68% total gain is only about 10.9% a year once time is accounted for.

3. A project that falls short

Cost $40,000, then $12,000 a year for four years.

IRR about 7.7%. Against a 12% hurdle rate, this one should be rejected even though it returns $48,000 on $40,000.

How It’s Calculated

Solve for r: 0 = Σ (CF_t ÷ (1 + r)^t) − Initial Investment.

r: Interest / discount rate (decimal per period)
Σ: Summation
CF_t: Cash flow at time t
t: Time (years or periods)

How to Read Your Result

IRR above your hurdle rate (cost of capital or required return): the project adds value.
IRR below the hurdle rate: it destroys value, even if total cash back exceeds cash in.
Comparing projects of different size: a higher IRR on a small project can add less value than a lower IRR on a large one — check NPV too.
Next step: confirm the decision with the NPV calculator at your hurdle rate.

Common Mistakes to Avoid

Forgetting the minus sign on the initial investment — without it there is no IRR to find.
Leaving out periods with zero cash flow, which shifts every later flow and inflates IRR.
Mixing monthly and annual flows. Use equal periods; IRR is per period.
Relying on IRR when cash flows change sign several times (e.g. a big refurbishment mid-project) — there may be more than one IRR. Use NPV instead.

Built and maintained by GenAlpha Tools Editorial. Formula tested against known answers and edge cases · last reviewed October 2026. How we calculate · Report an error

When to Use This Calculator

Decide whether a capital investment beats your cost of capital.
Compare real-estate deals with different holding periods.
Evaluate a startup or private investment from expected cash flows.
Present a project's return in a single annualized number.

Frequently Asked Questions

What is a good IRR?

One that exceeds your hurdle rate. Many companies use 10–15% for internal projects; private equity and venture investors often target 20%+ to compensate for risk.

What is the difference between IRR and ROI?

ROI compares total gain with cost and ignores timing. IRR is annualized and accounts for when each cash flow happens.

IRR vs NPV — which should I use?

Use both. NPV tells you how much value a project adds in dollars at your discount rate; IRR tells you the rate of return. When they disagree on ranking projects, NPV is usually the better guide.

Why does the calculator show no result?

IRR needs at least one negative and one positive cash flow. Check that the initial investment is entered as a negative number.

Do you store the values I enter?

No. All calculations happen in your browser. Your data never leaves your device.

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