IRR Calculator
Enter an initial investment and the cash flow at the end of each year. Add as many years as you need, up to 600, or paste a column of figures from a spreadsheet. The calculator finds the internal rate of return (IRR), the discount rate at which net present value equals zero. It also shows the NPV at a discount rate you pick and the payback period in years.
How to use the IRR Calculator
- Enter your numbers in the IRR Calculator above.
- Press the Calculate button to see the result.
- To try other numbers, change any value and press the button again.
The IRR definition
0 = Σ CF_t / (1 + IRR)^t
IRR is the rate that makes the present value of all cash flows, including the initial investment at year 0, equal zero. The calculator finds it by bisection between −99.99% and 1,000%, so the NPV has to change sign somewhere in that range. A blank year counts as 0 when a later year has a cash flow. The NPV uses the same sum at your discount rate and is rounded to the cent.
Worked example
Initial investment $10,000, then $2,500 at the end of each year for 5 years. The calculator shows an IRR of 7.93%. At a 7% discount rate the NPV is $250.49, so the flows earn more than 7%. At 9% the NPV is -$275.87. The payback period is 4.0 years, since four payments of $2,500 return the $10,000.
Frequently asked questions
Can I enter any number of cash flows?
Yes, up to 600 years. Press "Add a year" for one more box, or paste a list with one figure on each line, as a spreadsheet column arrives, and press "Use this list". Write a cash out as a negative figure, with - or −. Each figure is taken as the flow at the end of one year, so monthly figures would give a monthly rate.
What is the difference between IRR and ROI?
ROI is a single ratio of total gain to investment, ignoring timing. IRR is an annualized rate that accounts for when each cash flow occurs.
Can IRR be negative?
Yes. When an investment is followed only by positive flows that add up to less than it, the IRR is negative, and the calculator finds IRRs down to −99.99%. Flows that change sign more than once can have more than one IRR. The calculator then says so and lists each rate it finds from −99.99% to 1,000%. No one of them is the answer, and it does not compute MIRR, so compare the NPV at your own rate.
What does the payback period show?
The years until the cash flows add up to the initial investment, with the last year counted in part and rounded to a tenth. It does not discount the flows. If they never cover the investment within the years you enter, the calculator says so instead of giving a number.