Finocturne
Corporate finance

IRR Calculator

Enter an outlay and future cash flows to find the rate that makes their NPV zero.

Inputs

Results

Start with your numbers

Review or adjust your inputs, then calculate to see your results and interpretation.

Understand this calculation

Compare IRR with a required return. Cash flows that change sign repeatedly may have multiple IRRs; use NPV in that case.

See calculation method and assumptions

Formula

IRR

IRR is the discount rate that makes the net present value of all cash flows equal zero.

Variables, rates and periods

CF₀ / CFₜ
CF₀ is the initial outlay (enter a positive investment; it is treated as an outflow). CFₜ is the cash flow in year t. Later inflows are positive and outflows negative.
N
Final period count. This tool spaces subsequent cash flows one year apart; time zero is not discounted.
IRR
The annual rate that makes NPV zero. Multiple sign changes may prevent a unique solution.

Cash-flow timing and solver limits

  • The initial outlay occurs at year 0;
  • later rows occur at year end, with positive receipts and negative payments.
  • Equal annual spacing makes the result an effective annual IRR.
  • Repeated sign changes may produce multiple roots.
  • Numerical search has range and precision limits;
  • no result does not prove no mathematical solution exists.

Find the annual rate that sets a cash-flow series' NPV to zero.

Worked example

  1. Enter an initial investment of 1,000 as the time-zero outflow.
  2. Enter inflows of 600 in year one and year two.
  3. IRR is about 13.07%, the rate at which these cash flows have an NPV near zero.

Frequently asked questions

Why can IRR have multiple answers?

When cash flows alternate signs, the NPV curve may cross zero more than once.

Can IRR be found without both inflows and outflows?

Generally no. At least one positive and one negative cash flow are needed.

Should I compare projects using IRR or NPV?

When scale or timing differs, NPV often better reflects value at a chosen discount rate.

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