# IRR Calculator – Internal Rate of Return

URL: https://speedycalculator.com/calculators/finance/irr/
Last updated: 2026-10-25

> The IRR calculator finds the internal rate of return of an investment – the discount rate at which the net present value of all its cash flows is zero – from the initial investment and up to 30 yearly cash flows.

## Inputs

- Initial investment
- Cash flows for year 1, 2, 3 …
- Required rate of return (for NPV) (%)

## Results

- Internal rate of return (IRR)
- NPV at the required rate
- Total net cash flow
- Years of cash flows
- Decision

## Formula

```
Find r such that −investment + Σ CFₜ ÷ (1 + r)^t = 0
NPV at your required rate = Σ CFₜ ÷ (1 + required)^t − investment
```

## Explanation

IRR is the return an investment earns on the money tied up in it. A project is worth doing if its IRR exceeds your cost of capital. With unusual cash flows (signs changing more than once) IRR can be misleading – check the NPV too.

### How to use the IRR Calculator – Internal Rate of Return

- **Initial investment**
- **Cash flows for year 1, 2, 3 …**
- **Required rate of return (for NPV)**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the initial investment and the cash flow for each year (negative for extra outlays), and your required rate of return.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterInitial investmentAmount in your currencyCash flows for year 1, 2, 3 …A list of numbers separated by commas, spaces or new linesRequired rate of return (for NPV)In %

### What each result means

- **Internal rate of return (IRR)** = [Internal rate of return (IRR)](0 - [Initial investment], [Cash flows for year 1, 2, 3 …])×100
- **NPV at the required rate** = [NPV at the required rate]([Required rate of return (for NPV)]÷100, [Cash flows for year 1, 2, 3 …]) - [Initial investment]
- **Total net cash flow** = sum([Cash flows for year 1, 2, 3 …]) - [Initial investment]
- **Years of cash flows** = count([Cash flows for year 1, 2, 3 …])

### Example values

How the main result changes when **Initial investment** changes and everything else stays at the example values above:

Initial investmentInternal rate of return (IRR) (%)6,00048.2419,00023.47512,0009.39115,000-2.987e-1318,000-6.84724,000-16.386

## Worked example

Inputs — Initial investment: $12,000; Cash flows for year 1, 2, 3 …: 3000, 4000, 5000, 3000; Required rate of return (for NPV): 8 %.

Results — **Internal rate of return (IRR) = 9.391 %**; NPV at the required rate = $381.38; Total net cash flow = $3,000.00; Years of cash flows = 4; Decision = IRR beats the required return.

## FAQ

**What is a good IRR?**
One above your cost of capital or hurdle rate; many businesses look for 15%+.

**What is the difference between IRR and NPV?**
NPV is a dollar amount; IRR is a percentage return.

**Can a project have more than one IRR?**
Yes, if cash flows change sign more than once.

**What formula does the IRR Calculator – Internal Rate of Return use?**
Find r such that −investment + Σ CFₜ ÷ (1 + r)^t = 0.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)