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IRR Calculator
Find the internal rate of return on an investment from its upfront cost and the cash it returns each year. Enter your numbers and press Calculate.
Written by TopicDrill Editorial Team·Updated June 2026
Cumulative cash flow
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How the IRR calculator works
You start with an upfront cost, then receive cash back over several years. The internal rate of return is the single annual rate that, if used to discount every future cash flow, brings their present value down to exactly the size of your initial outlay. When that happens the net present value is zero, and the rate that did it is your IRR.
The chart above plots the cumulative cash flow. It begins below zero with your investment and climbs as returns arrive. The point where it crosses back above zero is your payback moment, while the IRR captures how quickly and how strongly the money came back relative to the time you waited.
A quick example
Suppose you invest $10,000 and receive $3,000, $4,000, $5,000 and $4,000 over the next four years. You get $16,000 back on a $10,000 outlay, but the timing matters. The IRR works out to roughly 24%, which reflects both the $6,000 profit and the fact that most of it arrived within a few years.
Things to keep in mind
IRR ignores the scale of a project and can behave oddly when cash flows switch sign more than once. For those cases, pair it with net present value. For background on evaluating returns, the U.S. Securities and Exchange Commission investor site is a solid reference. You can also explore our other free calculators.
Frequently asked questions
What is the internal rate of return?
The internal rate of return, or IRR, is the annual discount rate that makes the net present value of all cash flows from an investment equal to zero. In plain terms, it is the effective annual growth rate your money earns across the whole project.
How is IRR calculated?
IRR is the rate r that solves the equation where the sum of each cash flow divided by (1 + r) raised to its period equals zero, including the negative initial outlay. There is no simple closed-form solution, so it is found by trial and error. This tool uses a numerical search to land on the exact rate.
What is a good IRR?
It depends on your cost of capital and the risk involved. A common rule is that an investment is worth pursuing if its IRR is higher than the return you could earn elsewhere at similar risk, sometimes called the hurdle rate. Many investors look for double-digit IRRs on equity projects.
Why does my calculation show no IRR?
IRR only exists when the cash flows change sign at least once, normally a negative initial cost followed by positive returns. If every flow is positive or every flow is negative, there is no rate that zeroes out the net present value, so no IRR can be reported.
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