Free IRR Calculator
IRR Calculator
Calculate internal rate of return (IRR) and modified IRR (MIRR) for any investment. See where NPV crosses zero and compare to your cost of capital.
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Calculate the internal rate of return (IRR) and modified IRR (MIRR) for any investment. Enter your initial investment and expected cash flows to find the effective annual return — the discount rate that makes NPV exactly zero. Includes an NPV profile chart showing how NPV changes across discount rates.
How to Calculate IRR
- 1
Enter your initial investment
The upfront capital required for the project or investment.
- 2
Add cash flows by period
Enter expected returns for each period. Click "Add Period" to add more rows. Each row represents one period (year, quarter, or month).
- 3
Calculate IRR
The calculator uses numerical methods to find the rate that makes NPV = 0. Compare this to your cost of capital — if IRR exceeds it, the project creates value.
- 4
Toggle MIRR (optional)
Modified IRR uses separate reinvestment and finance rates for a more realistic return estimate. Enable it to see both IRR and MIRR side by side.
Why IRR Matters
Speaks the language of investors
VCs, PE firms, and real estate investors all think in IRR. When someone asks "what's the return on this deal?" they want IRR. It's the universal currency of investment performance.
Intuitive percentage return
While NPV gives you dollars, IRR gives you a percentage. "This project returns 18% annually" is immediately understandable — no context about project size needed.
MIRR fixes the reinvestment problem
Standard IRR assumes you reinvest cash flows at the IRR rate itself, which is often unrealistic. MIRR lets you specify a realistic reinvestment rate for a more conservative estimate.
Quick decision rule
If IRR > your cost of capital, accept. If IRR < cost of capital, reject. Simple, fast, and effective for screening investment opportunities.
Frequently Asked Questions
What is a good IRR?
It depends on your cost of capital and risk tolerance. For most businesses, an IRR above 15-20% is attractive. Real estate investors typically target 12-18%. VC investments aim for 25%+ to account for high failure rates. The key rule: IRR must exceed your cost of capital to create value.
What is the difference between IRR and MIRR?
IRR assumes cash flows are reinvested at the IRR rate itself, which can be unrealistically high. MIRR lets you specify a separate reinvestment rate (like your savings rate) and finance rate (like your borrowing rate). MIRR is more conservative and often more realistic for long-term projects.
Can a project have multiple IRRs?
Yes — if cash flows change sign more than once (positive, then negative, then positive again), there can be multiple rates that make NPV = 0. In these cases, MIRR is preferred because it always produces a single, unambiguous result.
How does this calculator find IRR?
It uses the Newton-Raphson numerical method, starting with an initial guess and iterating until NPV is within $0.01 of zero. If that doesn't converge, it falls back to a bisection method. This handles virtually all real-world cash flow patterns.
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