IRR (Internal Rate of Return) is the discount rate that makes the net present value of all cash flows equal to zero. It is the annualized return an investment earns on the money still invested.

How is IRR different from ROI?

ROI is a simple total return without timing. IRR accounts for when cash flows arrive, so it is better for comparing investments with different timelines.

Internal Rate of Return Calculator

Model an investment with steady annual cash flows.

Cash Flow Details

Initial Investment ($)

Annual Cash Flow ($)

Number of Years

yrs

Residual / Salvage Value ($)

Internal Rate of Return (IRR)

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Total Cash Inflows

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Total Nominal Profit

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How IRR is computed

IRR finds the rate r where NPV = −Investment + Σ Cash Flow ÷ (1+r)^year + Residual ÷ (1+r)^years = 0. The calculator solves this equation numerically. If no positive rate makes the equation balance, the result shows N/A — the cash flows are not enough to recover the investment.

IRR FAQ

What is a good IRR?▶

Compare IRR to your required rate of return or the cost of capital. In India, projects with an IRR above 12-15% are generally considered attractive, but it depends on risk.

Can IRR be negative?▶

Yes, if the cash flows fail to return the initial investment over time. A negative IRR means the project loses money even before considering inflation.

IRR Calculator

Internal Rate of Return Calculator

Cash Flow Details

Internal Rate of Return (IRR)

How IRR is computed

IRR FAQ