IRR Calculator
Calculate Internal Rate of Return (IRR) for investment analysis. Enter your initial investment and expected cash flows to determine annualized returns.
Amount invested at Year 0
Internal Rate of Return
20.53%
ExcellentNet Profit
$80,000
Cash Flow Timeline
IRR
20.5%
Simple ROI
80.0%
NPV @10%
$32,183
Payback
3.3 yrs
Interpreting Your IRR:
- vs. Required Return: IRR should exceed your cost of capital
- vs. Alternatives: Compare with other investment options
- NPV Check: Positive NPV @10% confirms profitability
Strong Investment Potential
An IRR of 20.5% exceeds most hurdle rates. Consider risk factors and alternative uses of capital.
Typical IRR by Investment Type
Real Estate
8-15%
Property investments
Private Equity
15-25%
Buyouts, growth equity
Venture Capital
20-30%+
Startup investments
Corporate Projects
10-15%
Capex decisions
Key Formulas
IRR Definition
NPV = 0 = Σ CFt / (1+IRR)^t
IRR is the rate where net present value equals zero.
NPV Formula
NPV = Σ CFt / (1+r)^t
Sum of discounted cash flows at rate r.
Decision Rule
Accept if IRR > Hurdle Rate
Investment is attractive if IRR exceeds required return.
Frequently Asked Questions
Official References
Learn more about IRR and investment analysis:
- Understanding Internal Rate of Return
Comprehensive guide to IRR calculations and applications
- CFI: IRR in Corporate Finance
Professional guide to using IRR for investment decisions
This calculator provides estimates. Actual investment returns depend on many factors including timing, risk, and market conditions.