IRR calculator (internal rate of return)
Enter the cash flows in order, evenly spaced: the investment as negative, money coming in as positive. The IRR is the rate that brings their net present value to zero.
Result
8.9%IRR per period
- Sign changes in the flows
- 1
Inputs
- Cash flows, first to last
- -1000; 300; 400; 500
- Gap between two flows
- One year
How it is calculated
We look for r such that Σ flow_k ÷ (1 + r)^k = 0, k going from 0 to the last flow.
Result
IRR per period
- Sign changes in the flows
- 1
How it is calculated
- We look for r such that Σ flow_k ÷ (1 + r)^k = 0, k going from 0 to the last flow.
- Every rate found is listed; there can be as many as there are sign changes.
- Yearly IRR = (1 + IRR)^(periods per year) − 1.
Example
Investing 1,000 then receiving 300, 400 and 500 over three years gives an IRR of 8.90% a year.
Good to know
- With several sign changes, several IRRs may exist, or none: the result says so instead of hiding it.
- The IRR assumes money coming in is reinvested at the same rate.
- Evenly spaced flows only.
Frequently asked questions
What is this tool used for?
Enter the cash flows in order, evenly spaced: the investment as negative, money coming in as positive. The IRR is the rate that brings their net present value to zero.
How is the result calculated?
We look for r such that Σ flow_k ÷ (1 + r)^k = 0, k going from 0 to the last flow.
What should I check before using the result?
With several sign changes, several IRRs may exist, or none: the result says so instead of hiding it.