IRR (Internal Rate of Return)
The annualized return that makes an investment’s cash flows break even in present-value terms.
What does irr mean?
IRR accounts for the timing of money in and out, not just the totals — cash received sooner is worth more. It’s the standard yardstick for comparing investments and projects with different cash-flow patterns.
Put it to use
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. Investment Property Calculator An investment property can be an excellent investment. This calculator is designed to examine the potential return you might receive from an investment property.
Related terms
IRR — frequently asked
What does IRR tell me?
IRR is the annualized return that makes an investment’s cash flows break even — the rate at which their net present value equals zero. It lets you compare deals with different timing and amounts on a single yardstick.
What is the difference between IRR and ROI?
ROI is total gain as a percentage, ignoring time; IRR annualizes the return and accounts for when each cash flow arrives. Two deals with the same ROI can have very different IRRs if one pays off much faster.