Internal Rate of Return (IRR) Calculator
Use this calculator to determine an Internal Rate of Return (IRR). It calculates the IRR on an annual basis of an irregular stream of up to 20 payments and withdrawals.
How the internal rate of return (irr) calculator works
It builds the cash-flow series — your initial investment as an outflow, the yearly cash flows as inflows, plus the final sale value — and solves for the single annual rate that makes their net present value zero.
Worked example: with initial investment of $100,000, annual cash flow of $8,000 and holding period (years) of 10, the internal rate of return (irr) calculator shows internal rate of return of 10.99%.
- Total cash received
- $230,000
- Total profit
- $130,000
- IRR (annualized)
- 10.99%
- Simple multiple
- 2.30×
The formula
IRR is the rate r where Σ [cash flowₜ ÷ (1 + r)ᵗ] = 0, found by iterating until the present value of all flows balances.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the internal rate of return (irr) calculator
What is the internal rate of return?
The annualized return that makes an investment’s cash flows break even in present-value terms. It accounts for the timing of money in and out, not just the totals.
Why is IRR better than total return?
Because it reflects when cash arrives — money received sooner is worth more. IRR lets you compare investments with very different cash-flow patterns on one rate.
What is a good IRR?
It depends on the risk and your alternatives — it should exceed the return you could earn elsewhere for similar risk (your hurdle rate). Higher is better for the same risk.
Is the Internal Rate of Return (IRR) Calculator free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.