IRR Calculator — Internal Rate of Return
IRR (Internal Rate of Return) is the discount rate at which an investment's net present value equals zero — the annualized return the cash flows imply. Enter your initial investment and annual cash flows below; the calculator solves IRR numerically, the same way the Excel model does.
0 = −Investment + Σ CFt ÷ (1 + IRR)^t
Worked example (default inputs)
| Initial investment ($) | 1000000 |
| Year 1 cash flow ($) | 150000 |
| Year 2 cash flow ($) | 250000 |
| Year 3 cash flow ($) | 350000 |
| Year 4 cash flow ($) | 450000 |
| Year 5 cash flow ($) | 550000 |
| IRR | 17.72% |
| NPV @ 12% | $180,418 |
| Total cash returned | $1,750,000 |
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Frequently asked questions
What is a good IRR?
It depends on risk: infrastructure deals target 8–12%, real estate 12–20%, venture investments 25%+. Compare IRR against your WACC or hurdle rate — value is created when IRR exceeds it.
How is IRR different from ROI?
ROI is a simple total return ignoring timing; IRR annualizes the return accounting for when each cash flow arrives. Earlier cash flows raise IRR.
Does the Excel model compute IRR?
Yes — the generated workbook computes equity IRR on post-debt cash flows with a live formula, alongside DCF enterprise value and payback period.
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