IRR calculator
Internal rate of return, NPV and payback period for a series of cash flows.
About this calculator
This IRR calculator works out the internal rate of return of an investment from its cash flows: the money you put in and what you get back each period.
It also gives the net present value at your chosen discount rate and the payback period.
How it works
IRR is the discount rate that makes the net present value of all the cash flows exactly zero. NPV adds each cash flow divided by (1 + rate)^period. Payback is when the running total turns positive.
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Worked example
- One cash flow per line, starting with the investment as a negative number: -10000; 3000; 4200; 6800
- Discount rate for NPV: 8% a year
Internal rate of return: 16.34%
Common questions
What is a good IRR?
One higher than your cost of money or the return you could get elsewhere with similar risk. Businesses often set a minimum, called a hurdle rate.
What is the difference between IRR and ROI?
ROI looks only at the total gain. IRR also accounts for when money comes in, so a project that pays back sooner has a higher IRR.
Why can't it find an IRR?
You need at least one negative and one positive cash flow. Unusual patterns, with several changes of sign, can have more than one IRR or none.
The story behind it
Where the idea came from: In 1936 John Maynard Keynes described the marginal efficiency of capital, a close cousin of the internal rate of return.
Companies need a way to compare projects with very different costs and timings. IRR gives each one a single rate, which made it a standard tool of corporate finance. Spreadsheets have an IRR function for the same reason.
Why you can trust this calculator
- It runs in your browser. Nothing you type into it is sent anywhere.
- The method is explained on this page, so you can check it yourself.
- Free to use, with no sign-up.
- Results are estimates, not financial advice.
- Spotted a mistake? Tell us and we'll look into it.
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