IRR Calculator
The rate a project actually earns.
IRR Calculator
Find the annual rate at which a project breaks even in present-value terms, then compare it with your hurdle rate.
Needs at least one negative and one positive value. The first value is period 0, usually the initial investment.
The minimum return you require. Leave as is or clear it to hide the comparison.
17.09%
Per period, assuming annual periods
Clears the 10% hurdle
- NPV at this rate
- 0
- Total invested
- 10,000
- Total returned
- 15,000
- Money multiple
- 1.50×
The money multiple ignores timing; the IRR is the rate that sets NPV to zero. If a project has more than one sign change, more than one IRR can exist — check the NPV profile before relying on the figure.
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What This Calculator Does
The IRR Calculator finds the annual rate at which a series of cash flows has a net present value of zero — the rate the investment actually earns. It reports the IRR, the NPV check at that rate, the money multiple, and whether the result clears a hurdle rate you set.
How It Works
IRR is the discount rate that makes discounted inflows equal discounted outflows. There is no closed-form solution for most series, so the calculator solves numerically by bisection: it narrows an interval until NPV is effectively zero. A series needs at least one negative and one positive cash flow, otherwise no internal rate exists.
Example
Invest 10,000 and receive 3,000, 3,500, 4,000, and 4,500 over four years. The IRR is about 17.6% a year. Against a 10% hurdle it clears comfortably; against a 20% hurdle it does not. Total returned is 15,000, a 1.5× money multiple — but the multiple alone ignores how long the money was tied up.
Formula
0 = Σ CFₜ / (1 + IRR)ᵗMultiple = Total inflows / Total outflowsIgnores timing, which is why IRR and the multiple can tell different stories.
Reading the Results
Internal rate of return
The per-period rate that zeroes NPV. It assumes interim cash flows are reinvested at the same rate, which is optimistic for very high IRRs.
NPV at this rate
A numerical check. It should be effectively zero; a large value means the solver landed on a different root or the series is ill-conditioned.
Money multiple
Total cash returned divided by total cash invested. Useful alongside IRR because it shows scale, not just rate.
Sources and References
CFA Institute — Internal Rate of Return
IRR is the discount rate that sets NPV to zero
Notes the reinvestment-rate assumption and the multiple-IRR problem with non-conventional cash flows.
Brealey, Myers & Allen — Principles of Corporate Finance
Comparing IRR with NPV
NPV and IRR can rank mutually exclusive projects differently when scale or timing differs.
References identify the method or data behind this calculator. Where a standard or tariff changes, the current edition applies, and the assumptions stated above take precedence over a remembered figure.
Frequently Asked Questions
What is a good IRR?
One above your hurdle rate — the return you could get elsewhere at similar risk. A 15% IRR is attractive against a 10% hurdle and inadequate against a 20% one. There is no universal threshold.
Why does the calculator reject my cash flows?
IRR needs at least one negative and one positive value. If every flow has the same sign, discounted value can never reach zero. If the series never changes sign, no internal rate exists.
Can a project have more than one IRR?
Yes. If the cash flows change sign more than once — for example a large decommissioning cost at the end — there can be multiple rates that zero the NPV. In that case use NPV at your cost of capital instead.
Is IRR better than NPV?
NPV is generally better for the decision itself because it measures value in money and avoids the reinvestment assumption. IRR is useful for communicating a rate and comparing projects of similar size and duration.