IRR Calculator
Calculate Internal Rate of Return (IRR) for equal or variable cash flows. Compare two projects, compute MIRR with reinvestment rate, view NPV profile at multiple discount rates.
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Internal Rate of Return (IRR)
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NPV at IRR (≈ 0) —
Total Cash Inflow —
Extended More scenarios, charts & detailed breakdown ▾
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IRR
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NPV at Discount Rate —
Investment Decision —
Professional Full parameters & maximum detail ▾
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Return Rates
IRR —
MIRR (Modified IRR) —
NPV Profile
NPV at 5% —
NPV at WACC —
NPV at 15% —
Decision Analysis
IRR vs WACC Decision —
Multiple IRR Warning —
How to Use This Calculator
- Enter your initial investment and annual cash flows to compute IRR.
- Use Equal Cash Flows for uniform annual returns — enter WACC to see the accept/reject decision.
- Use Variable Cash Flows to enter 5 different annual amounts.
- Use Compare Projects to find which of two investments has a higher IRR.
- Switch to Professional for MIRR, NPV profile at 3 rates, multiple-IRR warning, and decision rule.
Formula
IRR: solve for r where NPV = Σ CFt/(1+r)^t = 0
MIRR = (FV of positive CFs / PV of negative CFs)^(1/n) − 1
Decision rule: Accept if IRR > WACC
Example
Example: $10,000 investment, $3,000/year for 5 years. IRR = 15.24%. If WACC = 10%, NPV = +$1,372 → Accept. MIRR at 8% reinvestment = 13.1%.
Frequently Asked Questions
- Internal Rate of Return (IRR) is the discount rate that makes the Net Present Value (NPV) of a series of cash flows equal to zero. It represents the expected annual return rate of an investment. Accept the project if IRR > your required return (WACC).
- NPV requires you to input a discount rate and returns a dollar amount. IRR solves for the rate itself — you compare IRR to your hurdle rate. NPV is generally preferred for decision-making; IRR is useful for comparing across projects of different sizes.
- Modified IRR (MIRR) fixes two problems with IRR: it assumes positive cash flows are reinvested at a more realistic reinvestment rate (not at the IRR itself), and uses a separate finance rate for negative cash flows. MIRR is generally a more conservative and accurate measure.
- When cash flows change sign more than once (e.g., large negative outflow mid-project), there may be more than one IRR. This is called a "non-conventional" cash flow pattern. In such cases, use NPV or MIRR instead.
- The crossover rate is the discount rate at which the NPVs of two projects are equal. Below the crossover rate, one project is preferred; above it, the other is. It helps when IRR and NPV rankings conflict.
Related Calculators
Sources & References (5) ▾
- SEC — Investment Return and IRR Explained — U.S. Securities and Exchange Commission
- CFA Institute — IRR and Capital Budgeting — CFA Institute
- Federal Reserve — Investment Returns and Capital Formation — Federal Reserve
- SBA — Business Investment Return Analysis — U.S. Small Business Administration
- FINRA — Investment Evaluation and Performance — Financial Industry Regulatory Authority