IRR Calculator

Free IRR calculator: the internal rate of return of a series of cash flows, with the NPV, payback and a warning when the cash flows have more than one IRR.

Cash flows, one per period. Period 0 is usually the investment, entered as a negative number.

Internal rate of return (IRR)

β€”Net present value (NPV)
β€”Payback
β€”Discounted payback
β€”Profitability index

No currency is shown on purpose: the figures come out in whatever unit you type in.

The IRR is the discount rate that makes the NPV zero. Compare it with the return you require: if the IRR is higher, the project adds value. When the cash flows change sign more than once there can be two IRRs or none, and the NPV is the safer guide.

Also: NPV Calculator Β· ROI Calculator Β· Future Value Calculator

What it does

Net present value brings every future cash flow back to today’s money with a discount rate, usually the return you could get elsewhere or your cost of capital, and adds them up. A positive NPV means the project pays back the investment and more than that return; a negative one means the money would do better elsewhere. The IRR is the rate at which the NPV is exactly zero, the project’s own return.

How to use it

  1. Enter the discount rate per period: per year if each period is a year, per month if each period is a month.
  2. Enter the cash flows in order, starting with the investment in period 0 as a negative number; use “Add a period” for more.
  3. Read the NPV, the IRR and the payback, and check the table for the present value of each period.

The arithmetic runs in your browser. Nothing you type is sent anywhere and nothing is stored, so you can use these with real numbers.

Frequently asked questions

What discount rate should I use?
Use the return you give up by putting the money into this project: the rate of a safe investment plus a premium for the project’s risk, or the company’s cost of capital. The higher the risk, the higher the rate, and the lower the NPV.

What is the difference between NPV and IRR?
NPV is an amount of money at a rate you choose; IRR is a rate, the one that makes the NPV zero. They agree on whether a single project is worth it, but to compare projects of different sizes the NPV is the better guide, and when the cash flows change sign more than once the IRR may not be unique.

Wikipedia — Net present value
Wikipedia — Internal rate of return
Wikipedia — Payback period