IRR Calculator
Work out the Internal Rate of Return (IRR) for a series of cash flows spaced at regular, equal-length periods — for example, an initial investment now followed by a stream of returns once a year for several years. This is the classic "invest a lump sum, then receive N equal periods of returns" shape used in capital budgeting and project evaluation. Unlike the XIRR Calculator, IRR does not use actual calendar dates — each cash flow is simply assigned to a period (0, 1, 2, and so on). Enter each period's cash flow below and the calculator solves for the single periodic rate that ties them all together.
Fill in the form and select "Calculate" to see your results here.
What is the IRR Calculator?
This calculator computes IRR — Internal Rate of Return — the periodic rate that makes the net present value of a series of regularly spaced cash flows equal to zero. It is the simpler, classic sibling of XIRR: where XIRR handles cash flows on irregular real-world dates and weighs each one by the exact number of days invested, IRR assumes every cash flow lands at a neat, equal-length interval — one per year is the most common case — with no dates involved at all, just a period index. This makes IRR the standard metric for evaluating whether a project or capital investment is worth undertaking, since most project cash-flow projections (annual revenue, annual cost savings, and so on) are naturally expressed period by period rather than on specific calendar dates.
How to use this calculator
- For each row, choose whether it's an Outflow (money out, e.g. the initial investment or a cost in that period) or an Inflow (money in, e.g. a return or revenue received in that period).
- Enter the amount for that period (always entered as a positive number — the type you selected determines the sign). The period number is assigned automatically based on row order: the first row is Period 0, the second is Period 1, and so on.
- Select "+ Add period" for each additional period. You need at least one Outflow and one Inflow, across at least two periods.
- Select "Calculate IRR" to see the annualized (or per-period) rate of return.
Formula
There is no algebraic way to isolate IRR from this equation once there are more than two cash flows — the rate is raised to a different power in every term. This calculator solves it the same way spreadsheet software does: iteratively, using the Newton-Raphson method (with a bisection fallback for cash-flow patterns Newton-Raphson doesn't converge on), narrowing in on the rate that makes the right-hand side equal exactly zero.
Example
Suppose you invest ₹1,00,000 today (Period 0, an Outflow) in a project that returns ₹30,000 in Period 1, ₹35,000 in Period 2, ₹40,000 in Period 3, and ₹45,000 in Period 4. Entering these five period cash flows gives an IRR of approximately 17.09% p.a. This means the project's returns are equivalent to earning 17.09% per year on the ₹1,00,000 invested — if your cost of capital or hurdle rate is lower than 17.09%, the project would generally be considered worth undertaking.
Factors that affect your IRR
- Size and timing of the initial outflow. A larger upfront investment relative to the returns that follow lowers IRR, since more value has to be recovered before the project turns a profit.
- Number of periods. Spreading the same total returns over more periods generally lowers IRR, because each rupee of return is discounted back over a longer stretch of time.
- Shape of the return stream. Returns weighted toward earlier periods produce a higher IRR than the same total returns weighted toward later periods, since IRR rewards cash flows that arrive sooner.
- Number of sign changes. A cash flow sequence with more than one outflow-to-inflow switch can have multiple valid IRRs or none at all — see the FAQ below for more on this limitation.
Frequently Asked Questions
IRR (Internal Rate of Return) is the periodic rate that makes the net present value of a series of regularly spaced cash flows — an initial outlay followed by equal-length periods of returns — equal to zero. It is widely used in capital budgeting to decide whether a project or investment is worth undertaking: the IRR is compared against a "hurdle rate" or cost of capital, and a project is generally considered worth pursuing if its IRR exceeds that hurdle rate.
IRR assumes every cash flow is spaced at regular, equal-length periods — one per year, for example — with no actual dates involved, just a period index (0, 1, 2, and so on). XIRR handles cash flows that fall on irregular real-world dates and weighs each one by the exact number of days it was invested. If your actual cash flows don't fall at neat, equal intervals, XIRR is the correct tool to use, not IRR.
IRR is the rate that solves NPV = Σ CFt / (1+rate)^t = 0, and this equation cannot be rearranged algebraically to isolate the rate once there are more than two cash flows — the rate appears raised to a different power in every term. This calculator solves it the same way spreadsheet software does: iteratively, using the Newton-Raphson method with a bisection fallback, narrowing in on the rate that makes the equation equal exactly zero.
Yes. A negative IRR simply means the investment or project loses money over the periods entered — the total returns received don't add up to enough, even with no discounting, to recover the initial outlay. This is a real, valid result and not a calculation error.
A cash flow sequence that switches sign more than once — for example an outflow, then an inflow, then another outflow, then another inflow — can mathematically have more than one valid IRR, or none at all. This is a known limitation of IRR as a metric, not something specific to this calculator: the solver here returns whichever root Newton-Raphson or its bisection fallback finds first, and does not attempt to detect or resolve multiple roots. For cash flows with more than one sign change, treat the result with caution.
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Calculations are estimates based on the cash flows you enter. Actual project or investment returns depend on many factors not captured by a simplified period-based cash-flow model. See our full disclaimer.