IRR Calculator
Calculate IRR step by step: IRR is the rate r at which −initial + Σ CFₜ ÷ (1 + r)ᵗ = 0.
In short
Formula: IRR is the rate r at which −initial + Σ CFₜ ÷ (1 + r)ᵗ = 0.
What this calculator does
Calculate IRR step by step: IRR is the rate r at which −initial + Σ CFₜ ÷ (1 + r)ᵗ = 0. Worked example, questions and limitations included.
Use it to turn Currency (symbol only, never converted), Initial investment (year 0), Cash flow, year 1, Cash flow, year 2 (blank = none), and the other shown inputs into a checked result you can compare, copy, or rerun with different assumptions.
The page shows the formula, a numeric worked example, and the assumptions that affect this corporate finance calculation.
Inputs and what they mean
- Currency (symbol only, never converted)
- — choice value.
- Initial investment (year 0)
- — number value.
- Cash flow, year 1
- — number value.
- Cash flow, year 2 (blank = none)
- — number value.
- Cash flow, year 3 (blank = none)
- — number value.
- Cash flow, year 4 (blank = none)
- — number value.
- Cash flow, year 5 (blank = none)
- — number value.
- Cash flow, year 6 (blank = none)
- — number value.
How to use it
- Enter each value in the unit shown next to the box (use the unit converter first if your numbers are in other units).
- Check the breakdown to see every intermediate step.
- Read the limitations before relying on the result.
Formula
Internal rate of return as defined in OpenStax Principles of Finance.
Solved numerically by bisection between −100% and 1,000%.
Flags cash flows with more than one sign change, where IRR may not be unique.
IRR is the rate r at which −initial + Σ CFₜ ÷ (1 + r)ᵗ = 0.
Inputs used: Currency (symbol only, never converted), Initial investment (year 0), Cash flow, year 1, Cash flow, year 2 (blank = none), Cash flow, year 3 (blank = none), Cash flow, year 4 (blank = none), Cash flow, year 5 (blank = none), Cash flow, year 6 (blank = none).
Worked example
A three-year project
- Find r where the discounted flows equal $10,000.
- At about 13.7%, NPV ≈ 0.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
- Up to six annual flows.
- Reinvestment at the IRR is implied.
- Multiple IRRs possible with unconventional flows.
- Results are educational estimates built only from the figures you enter. They are not personalised investment, tax, legal or accounting advice. Rates, growth and discount assumptions are always yours to choose.
- The result depends on the values you enter for this irr calculator; it does not supply missing rates, rules, prices, dates, or assumptions for you.
Common questions
IRR or NPV?
When they disagree on ranking projects, finance textbooks favour NPV because IRR ignores project scale and assumes reinvestment at the IRR. Check the formula, example, and limitations on this page before using the result for a real corporate finance decision.
Why no answer sometimes?
If the flows never repay the investment, NPV never reaches zero. Check the formula, example, and limitations on this page before using the result for a real corporate finance decision.
Is this investment advice?
No. It is a calculation of the figures you enter, not a recommendation to invest or not.
How do I use the IRR Calculator?
Enter the required values for Currency (symbol only, never converted), Initial investment (year 0), Cash flow, year 1, Cash flow, year 2 (blank = none), Cash flow, year 3 (blank = none), and the other fields shown. The calculator applies the formula on this page and shows the main result with any supporting breakdown so you can check the arithmetic.
What formula does the IRR Calculator use?
IRR is the rate r at which −initial + Σ CFₜ ÷ (1 + r)ᵗ = 0. The visible formula section above lists the calculation path and the edge cases the page handles, so the result can be checked without relying on the form alone.
Can the IRR Calculator be used for exact decisions?
Use it as a calculation aid, not as a substitute for checking the underlying rule, contract, policy, or professional advice that applies to your situation. When a result depends on local rules, personal details, prices, or dates, enter those values yourself and confirm them before acting.
Related tools
Calculate ROIC step by step: ROIC = NOPAT ÷ invested capital, where NOPAT = EBIT × (1 − tax rate).
Calculate ROA step by step: Return on assets = net income ÷ average total assets × 100.
Calculate ROE step by step: Return on equity = net income ÷ average shareholders' equity × 100.
Calculate NPV step by step: NPV = −initial investment + Σ CFₜ ÷ (1 + r)ᵗ for t = 1…n.
Calculate Payback Period step by step: Payback = years before full recovery + unrecovered amount ÷ cash flow in the recovery year.
Calculate Discounted Payback step by step: Discount each CFₜ by (1 + r)ᵗ, then find when the cumulative discounted flow covers the investment.