IRR Calculator
The internal rate of return of a run of cash flows: the discount rate at which they are worth exactly nothing today, with the NPV profile and the MIRR.
Result…
How it's calculated
NPV(r) = Σ CFₜ ÷ (1 + r)^t, t = 0 … T IRR: the r where NPV(r) = 0 MIRR = (FV of positive flows at the reinvestment rate ÷ PV of negative flows at the finance rate)^(1/T) − 1 Yearly rate = (1 + periodic rate)^periods per year − 1
The internal rate of return is the discount rate at which an investment's cash flows add up to zero in today's money: the return it earns on the money tied up in it. A project beats your required return when its IRR is higher, which agrees with a positive NPV for an ordinary investment (one outlay, then income). When the flows change sign more than once, for example a clean-up cost at the end, there can be several IRRs or none, so this page finds every one between −99.9% and 10,000% and draws the NPV profile. The modified IRR (MIRR) replaces the IRR's assumption that returns are reinvested at the IRR with a finance rate and a reinvestment rate you choose, and always gives one answer. For the value at a single rate, use the NPV calculator.
Your numbers, step by step
About the IRR calculator
This IRR calculator finds the internal rate of return of a run of cash flows: the discount rate at which the money paid out and the money coming back are worth exactly the same today. Enter the flows starting with the one now (an outlay is negative), choose whether each value is a year, quarter or month, and it returns the IRR, the modified IRR (MIRR) at a finance rate and reinvestment rate you choose, and the NPV at your finance rate. It searches the whole range from −99.9% to 10,000%, so when the flows change sign more than once it reports every IRR it finds and warns you. The NPV profile chart shows where the value crosses zero, and the working shows the discounting with your numbers. For the value at one fixed rate, use the NPV calculator.
How to use it
- Type the “Cash flows, starting now”: the outlay first as a negative number, then one value per period, separated by commas or spaces.
- Choose “One value per” year, quarter or month; quarterly and monthly results are also shown as a yearly rate.
- Enter the “Finance rate (for MIRR)”, what funding the outlays costs you, and the “Reinvestment rate (for MIRR)”, what you could earn on money paid back.
- Read the IRR, then compare the MIRR and the NPV at your finance rate, and check the note for more than one IRR.
Worked example
An outlay of 50,000 now returns 12,000, 15,000, 18,000, 20,000 and 10,000 over five years. The IRR is 15.02%. With a 7% finance rate and a 6% reinvestment rate the MIRR is 11.05%, and the NPV at 7% is 11,397.66. A project with flows of −100, 230 and −132 has two IRRs, 10% and 20%, which is why the MIRR (7.95% at 8% and 8%) is the safer figure there.
Updated
Questions people ask
How do I calculate the IRR of an investment?
List every cash flow in order, starting with the outlay as a negative number, and find the discount rate at which their present values add up to zero. There is no direct formula, so the calculator searches for the rate and shows the check with your numbers.
What is the difference between IRR and MIRR?
The IRR assumes the money an investment pays back is reinvested at the IRR itself. The MIRR grows the positive flows at a reinvestment rate and discounts the negative ones at a finance rate you choose, and always gives a single answer.
Why does my project have two IRRs?
When the cash flows change from negative to positive and back again, for example a clean-up cost at the end, the NPV can cross zero more than once. Each crossing is an IRR, and none of them alone tells you whether the project pays; use the MIRR or the NPV at your own rate.
What is a good IRR?
One higher than your own required return or cost of capital, since that matches a positive NPV for an ordinary investment. What counts as high depends on the risk of the investment and on rates where you are.
Can I enter monthly cash flows?
Yes. Choose month under “One value per”; the IRR per month is turned into a yearly rate as (1 + monthly rate)^12 − 1, and the MIRR rates you enter as yearly rates are converted to monthly ones.
How far can I trust the IRR?
Only as far as the cash-flow estimates. It also ignores the size of the investment, so a small project can show a higher IRR than a much more valuable large one. For a real investment decision, check your figures with a financial adviser.