What is internal rate of return (IRR)?

Internal rate of return is the discount rate that makes the net present value of all cash flows equal to zero. It represents the annualised rate of return where the present value of money invested equals the present value of money received.

How do I use this IRR calculator?

Choose either the general IRR calculator for equal-period cash flows or the IRR based on irregular cash flow. Enter your initial investment as a negative cash flow and your future cash inflows and outflows as positive or negative values, then click Calculate. The tool estimates the internal rate of return and provides a summary of total invested, total returned and net profit.

Yes. A negative IRR means the investment loses value after accounting for all cash flows. In other words, the discounted value of cash received is less than the amount invested.

What is the difference between IRR and ROI or CAGR?

Simple ROI and CAGR use only a starting and ending value, while IRR can incorporate multiple contributions and withdrawals over time. For projects with irregular cash flows, IRR usually gives a more realistic measure of performance.

Internal Rate of Return (IRR) Calculator — Fixed & Irregular Cash Flow

General IRR calculator (equal-period cash flow)

Use this Internal Rate of Return calculator when cash flows occur at regular intervals — for example monthly savings, quarterly dividends or yearly project cash flows.

Initial investment Enter as a positive number; the calculator treats it as an outflow.

Cash-flow period IRR is computed per period and converted to an annual rate.

Cash flows by period

Period	Cash flow amount
1
2
3
4
5
6
7
8
9
10

Use positive numbers for inflows and negative numbers for extra investments.

Enter an initial investment and at least one non-zero cash flow, then select Calculate IRR.

IRR based on irregular cash flow

This version of the Internal Rate of Return calculator works with an initial investment and a stream of irregular annual cash flows. It is handy for real-estate deals, startup investments and projects where the amount you receive each year changes.

Initial investment

Year	Cash flow
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16

Enter an initial investment and at least one non-zero yearly cash flow, then select Calculate IRR.

How this Internal Rate of Return calculator works

The Internal Rate of Return is a powerful metric for evaluating the performance of investments where money moves in and out over time. Instead of focusing on a single starting and ending balance, IRR looks at every cash flow — deposits, withdrawals, dividends, rental income and sale proceeds — and finds the annual rate of return that makes their net present value (NPV) equal to zero.

Mathematically, for cash flows at equal time intervals we write:

NPV(r) = CF₀ + CF₁ / (1 + r)¹ + CF₂ / (1 + r)² + … + CFₙ / (1 + r)ⁿ

The internal rate of return is the value of r such that NPV(r) = 0. There is no simple algebraic formula for r, so this IRR calculator uses a numerical search behind the scenes to find a rate that balances the equation.

Example: IRR for a small property investment

Imagine you make the following investment:

Initial investment: −$100,000 (purchase price and closing costs).
Year 1: +$12,000 in net rent.
Year 2: +$12,000 in net rent.
Year 3: +$12,000 in net rent.
Year 4: +$12,000 in net rent.
Year 5: +$12,000 in net rent + $130,000 from selling the property.

Enter the initial investment as 100,000 in the Initial investment field (the calculator treats it as a negative cash flow) and enter each year’s net rent and sale proceeds as positive cash flows. The IRR calculator will show an internal rate of return of roughly 12–14% per year, depending on the exact figures you use.

IRR vs ROI, APY and CAGR

When you search for “investment return calculator” you will see many metrics. They can look similar but answer slightly different questions:

ROI (return on investment) is usually a simple percentage: profit divided by money invested. It ignores the timing of cash flows.
CAGR (compound annual growth rate) calculates the constant annual growth rate that turns your starting value into your ending value. It assumes a single deposit at the start and a single value at the end.
APY (annual percentage yield) focuses on interest paid by savings accounts and includes compounding.
IRR is unique because it can handle several cash flows in and out of the investment over time.

For simple “I invested once and sold once” situations, CAGR is usually enough. For more realistic cash-flow patterns with deposits, withdrawals and income along the way, IRR is often the most useful performance measure.

When to use IRR based on irregular cash flow

The IRR based on irregular cash flow calculator on this page is designed for cases where the cash flows are not fixed each year. Common examples include:

Start-up or private equity investments with variable dividends.
Real-estate projects with uneven renovation costs and rent.
Business projects with a mix of upfront spending and later savings.
Side hustles where profit builds gradually before stabilising.

Simply enter your initial investment and type each year’s net cash flow as either a positive (money received) or negative (extra investment or expense) number. The calculator treats any empty year as zero.

Limitations and caveats of IRR

Internal Rate of Return is powerful but not perfect. Be aware of the following limitations when interpreting the result:

Some unusual cash-flow patterns can produce multiple IRRs or no real solution at all. If the calculator says no stable IRR exists, it usually means the NPV curve never crosses zero.
IRR assumes you can reinvest intermediate cash flows at the same rate, which may not be realistic in low-rate environments.
When two projects have different sizes, a higher IRR does not always mean more total profit. Comparing NPV at a chosen discount rate is often better when projects compete for the same capital.
IRR is not adjusted for inflation, taxation or currency risk; you may want to run separate scenarios that include these factors.

Practical tips for using this IRR calculator

Treat all amounts as after-fee, after-tax if you want a clean apples-to-apples comparison between opportunities.
Use the equal-period IRR calculator when your cash flows arrive at a regular rhythm, even if the amounts are not identical.
Use the irregular cash-flow version when your cash flows are mainly annual but change in size as a project matures.
Try a few alternative scenarios (lower rent, higher costs, delayed sale) to see how sensitive the IRR is to your assumptions.

Frequently asked questions about IRR

Is a higher IRR always better?

Generally yes — a higher internal rate of return indicates a more profitable investment. However, you should also consider project size, risk, time horizon and whether the investment’s IRR exceeds your required hurdle rate or cost of capital.

What is a “good” IRR?

A good IRR depends on inflation, interest rates and risk. For a safe government bond, a modest IRR might be acceptable, whereas a startup investor may demand 20–40% or more to compensate for risk. Use this calculator to compare potential investments against your own minimum acceptable rate of return.

Can I use this IRR calculator for personal savings goals?

Yes. If you occasionally add or withdraw money from a savings or brokerage account, IRR can show the effective annual return on your real cash-flow pattern — not just the change in account value.

How many cash flows can I enter?

The equal-period IRR calculator supports up to ten periods; the irregular cash-flow calculator supports up to sixteen years. That is enough for most small projects and investment scenarios. For very long time series, a spreadsheet IRR or XIRR function may be more convenient.