IRR Calculator

Calculate Internal Rate of Return (IRR) for investments and projects. Analyze cash flows and determine investment profitability with comprehensive analysis.

✓ Cash Flow Analysis ✓ NPV Comparison ✓ Investment Decision

IRR Calculator

Initial Investment

Initial cash outflow (negative value)

Cash Flows

Analysis Options

Required rate of return

Calculation precision

IRR Formula

Internal Rate of Return calculation

IRR Formula:

NPV = Σ(CFt / (1 + IRR)^t) = 0
Where: CFt = Cash Flow at time t, IRR = Internal Rate of Return

Investment Examples

Real Estate Investment
$100K initial, growing returns
Business Project
$200K initial, steady cash flows
Equipment Purchase
$50K initial, declining returns

IRR Interpretation

IRR > Required Rate: Accept project
IRR < Required Rate: Reject project
IRR = Required Rate: Indifferent
Higher IRR: Better investment

IRR vs NPV

📊 IRR: Rate of return percentage
💰 NPV: Dollar value added
⚖️ Decision: Both should be positive
🎯 Ranking: NPV preferred for mutually exclusive projects
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Understanding IRR

Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows equal to zero. It represents the expected annual rate of growth an investment will generate.

  • Decision Rule: Accept if IRR > required rate of return
  • Comparison Tool: Higher IRR indicates better investment
  • Break-even Rate: Minimum return to justify investment
  • Time Value: Considers timing of cash flows

IRR Applications

Capital Budgeting

Evaluate and rank investment projects and capital expenditures.

Real Estate

Analyze property investments and rental income streams.

Business Valuation

Determine the attractiveness of business acquisitions.

Portfolio Management

Compare different investment opportunities and strategies.