IRR Calculator
Calculate internal rate of return, NPV, and payback for your cash flow sequence.
Cash flow inputs
Internal rate of return:
Net present value:
Payback period:
Total net cash flow:
If cash flow signs are all positive or negative, IRR cannot be computed reliably.
IRR and NPV explained
Net present value (NPV) discounts every future cash flow back to today's dollars using your chosen discount rate, then sums them — a positive NPV means the investment is expected to create value at that discount rate. Internal rate of return (IRR) is the discount rate that would make NPV exactly zero; it's found here using an iterative numerical method (the secant method) rather than a direct formula, since no closed-form solution exists for arbitrary cash flow series.
Frequently asked questions
How should I decide using IRR? Generally, an investment is attractive if its IRR exceeds your required rate of return (often called the "hurdle rate") — the same rate you'd otherwise use as the discount rate for NPV.
Why did it say IRR "cannot be computed reliably"? IRR requires at least one sign change in the cash flow series (typically a negative initial investment followed by positive returns) — an all-positive or all-negative series has no meaningful IRR.
Should I use NPV or IRR to compare two investments? NPV is generally considered more reliable for comparing investments of different sizes or cash flow patterns, since IRR can occasionally produce misleading rankings — many analysts use both together rather than relying on IRR alone.