IRR Calculator
Calculate Internal Rate of Return (IRR) for an investment with multiple cash flows. Essential for comparing investment opportunities and project analysis.
Financial Disclaimer
This calculator is for educational purposes only and does not constitute financial advice. Results are estimates based on the inputs provided. Consult a qualified financial advisor before making investment or financial planning decisions.
Inputs
Results
Internal Rate of Return (IRR)
20.53%
How to Use This Calculator
- Enter the initial investment amount (as a negative number representing cash outflow).
- Enter the expected cash flows for Years 1 through 5.
- Review the Internal Rate of Return (IRR) — the annualized return of the investment.
- Compare the IRR to your cost of capital or required return rate to decide if the investment is worthwhile.
- Also review the multiple on invested capital (MOIC) and total net profit.
How the result changes with Initial Investment
| Initial Investment | Internal Rate of Return (IRR) |
|---|---|
| $10,000,001.00 | -62.74% |
| $35,000,001.00 | -71.57% |
| $65,000,000.00 | -75.06% |
| $90,000,000.00 | -76.71% |
What each input means
- Initial Investment
- The upfront investment amount (entered as positive).
- Year 1 Cash Flow
- Net cash flow in year 1 (positive for inflow).
- Year 2 Cash Flow
- Net cash flow in year 2.
- Year 3 Cash Flow
- Net cash flow in year 3.
- Year 4 Cash Flow
- Net cash flow in year 4.
- Year 5 Cash Flow
- Net cash flow in year 5 (include exit value if applicable).
What each result means
- Internal Rate of Return (IRR)
- The discount rate that makes NPV equal to zero.
- Multiple on Invested Capital
- Total returns divided by initial investment.
- Net Profit
- Total inflows minus initial investment.
- NPV at IRR
- Should be approximately zero.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersInitial Investment = 100000, Year 1 Cash Flow = 25000, Year 2 Cash Flow = 30000, Year 3 Cash Flow = 35000 = 6 input(s) provided
- Calculate Internal Rate of ReturnInternal Rate of Return20.53 = 20.53
- Calculate Multiple on Invested CapitalMultiple on Invested Capital1.8 = 1.8
- Calculate Total Cash InflowsTotal Cash Inflows180000 = $180,000
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators.
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