IRR Calculator
The internal rate of return is the discount rate at which an investment breaks even in present-value terms. It is a standard way to judge projects and investments with several cash flows.
Results
Annualised IRR
17.094%
- IRR per period
- 17.094%
- Total money out
- ₹1,00,000
- Total money in
- ₹1,50,000
The IRR is 17.094% per period, which is 17.09% a year.
Show the calculation steps
- Treat the 5 cash flows as periods 0 to 4.
- Find the rate r where Σ cash flow ÷ (1 + r)^t = 0 (solved numerically): r = 17.0937% per period.
- Annualise: (1 + r)^1 − 1 = 17.094%.
- Some cash-flow patterns (several sign changes) have more than one IRR. This calculator returns the one between −99.99% and 100,000%.
What IRR tells you
IRR is the annual growth rate implied by a stream of cash flows. If it exceeds your required return, or the cost of borrowing, the investment looks attractive on a return basis.
Limits of IRR
IRR ignores the scale of a project, assumes interim cash flows can be reinvested at the same rate, and can be ambiguous when cash flows change sign several times. Use NPV alongside it.
Formula
0 = Σ cash flow_t ÷ (1 + IRR)^t for t = 0 … n
Annualised IRR = (1 + IRR)^(periods per year) − 1
Where:
- t
- = Period number (0 for the first cash flow)
- IRR
- = The discount rate that makes the NPV zero
Example calculation
₹1,00,000 invested, then four annual inflows
Inputs
- Periods per Year
- 1: annual cash flows
Result
- IRR per period
- 17.094%
- Annualised IRR
- 17.094%
- Total money out
- ₹1,00,000
- Total money in
- ₹1,50,000
Step-by-step
- Treat the 5 cash flows as periods 0 to 4.
- Find the rate r where Σ cash flow ÷ (1 + r)^t = 0 (solved numerically): r = 17.0937% per period.
- Annualise: (1 + r)^1 − 1 = 17.094%.
Important notes
- Results are estimates based on the values you enter. They assume the rates stay constant and exclude taxes and fees unless stated.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
What is the difference between IRR and XIRR?
IRR assumes the cash flows are evenly spaced. XIRR takes actual dates, so use it when the timing is irregular.
Why can't the IRR be found?
It needs at least one negative and one positive cash flow. Without both, there is no rate that balances them.
How is IRR different from NPV?
NPV gives a money value at a chosen discount rate. IRR gives the rate at which that NPV is zero.
Related calculators
- NPV CalculatorCalculate the net present value (NPV) of a series of cash flows at a discount rate to judge whether an investment adds value.
- CAGR CalculatorFind the compound annual growth rate (CAGR) from a starting value, an ending value and the number of years.
- XIRR CalculatorCalculate the annualised return (XIRR) of investments made and received on different dates, such as SIPs and withdrawals.
- ROI CalculatorCalculate the return on investment (ROI) as a percentage, the gain or loss and the annualised return over your holding period.
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