IRR Calculator
Internal rate of return (IRR) is the annualized return on an investment. It is the discount rate that makes net present value equal to zero. Enter your initial investment (negative) and expected cash flows for each year. The calculator uses iteration to find the IRR that balances all cash flows.
IRR formula
0 = CF_0 + Sum(CF_t / (1 + IRR)^t) for t = 1 to N
Solve for IRR where NPV equals zero.
This calculator uses Newton-Raphson iteration to find IRR approximation.
How to use this calculator
- Enter your initial investment as a negative number (e.g., -100,000).
- Enter expected annual cash flows, separated by commas, for each year.
- The calculator iteratively solves for the IRR where NPV equals zero.
- Compare the IRR to your required rate of return to decide.
IRR decision rule
- IRR > Required Return: Invest. The project exceeds your expectations.
- IRR = Required Return: Indifferent. Returns equal your requirements exactly.
- IRR < Required Return: Do not invest. The project underperforms.
IRR calculator: frequently asked questions
What is internal rate of return?
IRR is the discount rate that makes net present value equal to zero. It represents the annualized return on your investment, accounting for all cash flows and timing.
How is IRR different from NPV?
NPV shows the dollar value of an investment at a given discount rate. IRR finds the breakeven discount rate. Compare IRR to your required return to evaluate the project.
When should I use IRR?
Use IRR to compare investments with different initial costs, timings, or durations. Compare the calculated IRR to your required rate: if IRR is higher, the project is attractive.
Can there be multiple IRRs?
Yes, projects with changing cash flow patterns (outflow, inflow, outflow again) can have multiple IRRs. This calculator finds the primary rate.
What if I get an error?
IRR requires at least one negative and one positive cash flow. Ensure your initial investment is negative and future cash flows are positive.
Official sources
- U.S. Securities and Exchange Commission: Investor Education.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.