IRR Calculator
Measure the annual return generated by a project or investment.
Project attractiveness: —
IRR represents the annualized return implied by the project cash flows.
Example
Annual cash flow: $500
Duration: 3 years
→ IRR ≈ 23.4%
Understand this calculator
This IRR calculator estimates the annual rate of return generated by a project. To understand how IRR works, its limitations, and when it should be used, read the full concept explanation.
Learn more about Internal Rate of Return (IRR)What does this IRR calculator do?
It computes the internal rate of return implied by an initial investment and a series of future cash flows.
Why use IRR?
IRR expresses project performance as a percentage, making it intuitive and easy to compare with required returns or alternative investments.
How does it work?
The calculator finds the discount rate that makes the net present value of cash flows equal to zero, using an iterative numerical method.
Frequently Asked Questions
What does IRR represent?
IRR represents the annualized rate of return generated by a project.
Is a higher IRR always better?
Not necessarily. Project size, risk and duration must also be considered.
Should IRR be used alone?
No. IRR is best used together with NPV to make sound decisions.