IRR Calculator – Calculate Internal Rate of Return
Compute the internal rate of return for a set of cash flows.
About the IRR Calculator
What is the IRR Calculator?
An IRR calculator finds the internal rate of return: the discount rate at which the net present value of a series of cash flows equals zero.
Why use this calculator?
IRR is the standard way to compare the profitability of investments, projects and acquisitions where money arrives over several years rather than all at once.
How to use it
- Enter the cash flows separated by commas, starting with the initial investment as a negative number.
- Optionally add a discount rate to see the NPV too.
- Read the IRR and the NPV.
Formula
Solve for r where Σ cash flow ÷ (1+r)^period = 0.
If cash flows change sign more than once, multiple IRRs are possible. IRR assumes reinvestment at the same rate, which may not be realistic.
Frequently Asked Questions
IRR versus NPV, which should I use?
NPV tells you the dollar value added at a chosen rate. IRR tells you the breakeven rate of return. Using both together is the common best practice.
Why does IRR sometimes give an odd result?
Non-conventional cash flows (multiple sign changes) can produce multiple or no real IRRs. In that case rely on NPV and modified IRR.
What is compound interest?
Compound interest is interest earned on both your original money and on previously earned interest. Over time it can make savings grow much faster than simple interest.
What is the difference between nominal and effective return?
The nominal return ignores compounding within the year, while the effective (annualised) return accounts for it. The effective figure is usually higher and better reflects real growth.
How does inflation affect my returns?
Inflation erodes purchasing power. The real return is the nominal return minus inflation, so an investment can grow in dollars yet still lose value in what it can buy.
What rate of return should I assume?
A common long-term assumption for a diversified stock portfolio is about 6% to 8% per year after inflation, but returns vary and are never guaranteed.
Does this account for taxes and fees?
Unless stated, the tool shows pre-tax, pre-fee growth. Subtract your fund expense ratio and expected tax rate to estimate what you keep.
Is this calculator free to use?
Yes. Every calculator on this site is completely free, with no hidden fees, no subscriptions and no limits on how many times you can use it.
How accurate are the results?
We use standard, widely accepted formulas and calculate in your browser using double-precision arithmetic. Results are rounded for readability, so treat them as reliable estimates rather than a guarantee. Real-world factors can vary the true figure.
Can I add this calculator to my own website?
Yes. Open this calculator page and use the "Add to your website" box in the sidebar to copy a ready-made iframe snippet, then paste it into any HTML page.