// IRR CALCULATOR

IRR Calculator

Calculate the internal rate of return — the discount rate that makes the net present value of a cash flow series equal to zero.

// INPUTS

CASH FLOWS (PERIOD 0, 1, 2, …)

One per line. Negatives are outflows. Period 0 is today.

// OUTPUT

INTERNAL RATE OF RETURN

19.71%

NUMBER OF PERIODS6

NOMINAL SUM OF FLOWS₹75,000

NPV AT IRR (CHECK)-₹0.00

// FORMULA

0 = Σ CFₜ / (1 + IRR)ᵗ

IRR is solved numerically. Cash flows are equally spaced in time.

// EXAMPLE

// WORKED OUT

Project costs ₹1,00,000 today and returns:
  Y1: ₹25,000, Y2: ₹30,000, Y3: ₹35,000,
  Y4: ₹40,000, Y5: ₹45,000
  IRR ≈ 20.27%

// WHAT THIS MEANS

IRR is the single rate of return that fits a complicated cash flow series. Unlike CAGR, IRR can handle deposits, withdrawals, and uneven receipts at any point. Compare an IRR to your cost of capital or to other projects' IRRs — if it is higher, the project adds value.

// FAQ

Can IRR be misleading?+

Yes. IRR can have multiple solutions when cash flows change sign more than once, and it overstates returns from short, front-loaded projects. NPV is often a safer ranking criterion.

What time spacing does this assume?+

Equal-spaced periods (annual unless you decide otherwise). For irregular dates, you need an XIRR calculation.

What if the calculator says IRR is undefined?+

You need at least one inflow and one outflow. A series of all positives or all negatives has no IRR.