Internal rate of return of a project. The IRR Calculator takes initial investment, cash flow year 1, year 2, year 3, year 4, year 5 and returns internal rate of return plus total cash returned, cash multiple. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Investment maths is about comparing money at different points in time on a fair basis. Compound rates, discounting and annualised returns let you compare options of different sizes and durations. Use the worked example below to check the maths against your own figures.
How the IRR Calculator works
IRR is the annual return the project actually earns. Compare it with your cost of capital: accept when IRR is higher. It assumes cash flows are reinvested at the IRR, which the MIRR calculator corrects.
Worked example
With the example values (initial investment of $100,000, cash flow year 1 of $30,000, year 2 of $30,000, year 3 of $30,000, year 4 of $30,000, year 5 of $30,000), the internal rate of return is 15.24%; total cash returned $150,000.00, cash multiple 1.50x. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is internal rate of return calculated?
IRR is the discount rate at which the net present value of the cash flows equals zero.
Which figures do I need?
Initial investment, cash flow year 1, year 2, year 3, year 4, year 5. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Does the calculator account for taxes and fees?
Only where there is an input for them. For a true net return, add fees and taxes to your inputs or use the stock and crypto profit calculators, which include them.
