fincalculator
IRR Calculator
Use this free IRR Calculator to calculate the Internal Rate of Return for your cash flows. Simple, accurate, and easy to use for analysis.
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INPUT VALUES
IRR Calculator
The Internal Rate of Return (IRR) Calculator determines the profitability of potential investments. It is the discount rate that makes the Net Present Value (NPV) of all cash flows equal to zero.
Widely used in corporate finance and real estate, IRR helps you decide between projects. Generally, if IRR > Cost of Capital, the project is a 'Go'.
Why You Need This Tool
- Project ComparisonCompare Project A vs Project B on equal footing.
- Capital BudgetingEssential for business decisions.
- Real Estate AnalysisEvaluate rental property performance.
The Mathematics Behind It
How to Use This Calculator
Enter the negative cash outflow at start.
Enter the net income for each subsequent period.
Understanding Your Results
IRR %
The expected annualized return rate.
Decision Rule
Accept if IRR > Required Return.
Common Mistakes to Avoid
- Unconventional Flows: Projects with alternating positive/negative flows can have multiple IRRs.
Frequently Asked Questions
Is higher IRR always better?
Usually, but consider the size and duration of the project (NPV) too.
How is it calculated?
It's solved iteratively; there is no simple algebraic formula.