Internal rate of return tool
Calculate internal rate of return for recurring cash flows or irregular annual cash flows, then compare the result with NPV, hurdle rate, simple ROI, and payback.
IRR is useful for timing-sensitive cash flows, but it should be checked against NPV, project size, reinvestment assumptions, and risk.
Recurring cash flow IRR
Results update automatically as you edit the inputs.
IRR solves NPV = 0 using the initial investment, recurring cash flows, and ending balance.
Annual cash flow IRR
Annual IRR uses end-of-year cash flows.
NPV = CF0 + CF1/(1+r)^1 + CF2/(1+r)^2 ...; IRR is the r that makes NPV equal zero.
Cash flows are shown with their timing and sign.
| Period | Time | Cash flow | Discounted at hurdle |
|---|
Method
IRR is the discount rate that makes the net present value of all cash flows equal zero. A negative cash flow usually represents money invested. A positive cash flow usually represents money returned to the investor.
The fixed cash flow tab creates a timeline from the initial investment, recurring payments, and ending balance. The irregular annual cash flow tab treats each listed cash flow as occurring at the end of that year.
Interpretation
If IRR is above the required return, the project may be worth further review. If it is below the hurdle rate, the cash flows may not justify the risk.
IRR is a percentage. NPV shows dollar value at the chosen discount rate and can be better when comparing projects of different size.
Cash flows that change sign more than once can create multiple possible IRRs or make the result hard to interpret.
A high IRR can depend on receiving cash early or on optimistic sale proceeds. Stress-test important assumptions.
IRR is solved iteratively because most real cash flow patterns cannot be rearranged into a simple one-step formula. This calculator searches for the rate where NPV crosses zero.
When cash flows are dated or occur at non-annual intervals, the timing exponent changes. That is why monthly recurring cash flows can produce a different result from the same total cash flow received once per year.
Related tools
Use the irregular annual cash flow tab. Enter the initial investment and each later annual cash flow. Negative values represent additional investments or costs, while positive values represent inflows.
XIRR-style calculations use the timing of cash flows rather than assuming every cash flow occurs exactly one year apart. The fixed cash flow tab uses fractional timing for recurring payments.
Simple ROI ignores timing. IRR accounts for when cash flows occur, so earlier inflows usually improve IRR compared with the same cash received later.
It is the dollar value of the cash flow stream discounted at your required return. Positive NPV means the project exceeds that hurdle rate in dollar terms.
Yes. If the cash returned is not enough to recover the investment on a time-value basis, IRR can be negative.
Yes. If the cash flows do not contain both negative and positive values, or if the NPV curve does not cross zero in a meaningful range, a valid IRR may not exist.
Multiple IRRs can occur when cash flows switch signs more than once, such as an investment, then inflows, then a large cleanup or exit cost.
Not always. IRR is easy to compare as a percentage, but NPV can be better for ranking projects with different sizes or different reinvestment assumptions.
Yes, for simplified cash flow analysis. Enter purchase cost as the initial investment, annual net cash flows, and sale proceeds as a later positive cash flow.
Yes for simplified cash flow timing, but actual private investments may require more detailed capital calls, distributions, fees, taxes, and valuation assumptions.
This calculator is for general informational purposes and simple arithmetic checks. It is not investment advice, tax advice, legal advice, a valuation opinion, or a recommendation to buy or sell any asset. IRR depends heavily on estimated cash flows and timing. Verify important decisions with reliable records and a qualified professional.
Last reviewed: July 3, 2026.