IRR Calculator - Internal Rate of Return

Internal rate of return is the discount rate that sets an investment’s net present value to zero. If you pay cash today and collect cash later, IRR is the constant annual yield that makes those flows break even in present-value terms. Capital-budgeting teams compare IRR with a hurdle rate; private-market investors use it to summarize a deal; students use it to see why timing matters as much as the total dollars received. The IRR calculator solves 0 = initial investment + Σ(cash flow in period t ÷ (1 + r)^t) with bisection. Enter the initial outlay as a negative number and later inflows as a comma-separated list in time order. With −$100,000 followed by $30,000, $35,000, $40,000, $45,000, and $50,000, IRR is about 25.75%. Level $15,000 receipts for five years on a −$50,000 outlay produce about 15.24%. Because later cash is discounted more, a back-loaded stream needs larger late receipts to match an even stream’s IRR. NPV at the solved rate should be near zero; that is a numerical check, not a second performance measure. Total future cash flows and net cash gain ignore time value and will look more generous than IRR when receipts arrive late. Multiple sign changes can produce multiple real roots; the solver looks for a root between −99.99% and 1,000% and returns nothing if the NPV does not change sign. IRR assumes cash flows can be reinvested at the same rate, which is often unrealistic for very high IRRs. It also says nothing about scale: a tiny project can outrank a large one on IRR and still create less wealth. Compare IRR with NPV at your cost of capital, and do not treat a solved rate as a guaranteed yield. The calculator is a planning identity, not an appraisal of risk, leverage, or accounting earnings.