Internal Rate of Return (IRR) Calculator
Calculate the Internal Rate of Return (IRR) for your investments. Determine the annualized return rate that makes the net present value (NPV) of all cash flows equal to zero.
Step 1: Investment & Cash Flows
Understanding IRR
The Internal Rate of Return (IRR) is the annualized effective compounded return rate that makes the net present value (NPV) of all cash flows from a particular investment equal to zero.
Step 2: Financial Settings
About IRR Interpretation
If the IRR exceeds the required rate of return (hurdle rate), the investment is considered profitable. Higher IRR indicates better investment potential, but consider risk and other factors.
IRR Calculation Results
Internal Rate of Return (IRR)
Investment Type Comparison
| Investment Type | Typical IRR Range | Risk Level | Recommended For |
|---|
Cash Flow Timeline Analysis
IRR Calculation Formula
NPV = Σ [CFₜ / (1 + IRR)ᵗ] = 0
IRR is calculated by finding the discount rate that makes the Net Present Value (NPV) of all cash flows equal to zero. The calculation involves solving for the rate in the NPV equation.
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