IRR Calculator
Find the internal rate of return of an investment that pays the same net cash flow every year, with the NPV at your hurdle rate and simple payback alongside.
- Free
- No sign-up to try
- Works as you type
IRR for equal annual cash flows
Internal rate of return (IRR)
12.38%
NPV at your hurdle rate
$3,071
Simple payback
3.6 years
Cash returned minus investment, undiscounted
$20,000
- IRR is the rate r at which the cash flows' present value equals the investment: cash flow × (1 − (1 + r)^−years) ÷ r = investment.
- There is no exact formula for r, so it is approximated: Baily's annuity-rate formula gives a first estimate, then six rounds of r = (cash flow ÷ investment) × (1 − (1 + r)^−years) refine it.
- Tested against an exact numerical solver: within 0.01 percentage points for positive IRRs over 1 to 50 years.
- NPV at your hurdle rate = cash flow × (1 − (1 + hurdle)^−years) ÷ hurdle − investment.
- Simple payback = investment ÷ yearly cash flow.
Free, no sign-up to try. Save it as a live calculator you can share; an estimate from the numbers you enter, not financial advice. Check the result against your own records before you rely on it.
How it works
How the IRR Calculator works
- 1
Enter your numbers
Every result updates as you type, with the formula shown under it.
- 2
Check the method
See how each number is worked out and what it assumes.
- 3
Save it as a Room
Share a live calculator: others can change the numbers and see the result update.
Worked example
What it makes
Example inputs
- Upfront investment
- $50,000
- Net cash flow each year (the same every year)
- $14,000
- Years of cash flows
- 5
- Your hurdle rate (the return you require)
- 10 %
Results
- Internal rate of return (IRR)
- 12.38%
- NPV at your hurdle rate
- $3,071
- Simple payback
- 3.6 years
- Cash returned minus investment, undiscounted
- $20,000
How it's calculated
- IRR is the rate r at which the cash flows' present value equals the investment: cash flow × (1 − (1 + r)^−years) ÷ r = investment.
- There is no exact formula for r, so it is approximated: Baily's annuity-rate formula gives a first estimate, then six rounds of r = (cash flow ÷ investment) × (1 − (1 + r)^−years) refine it.
- Tested against an exact numerical solver: within 0.01 percentage points for positive IRRs over 1 to 50 years.
- NPV at your hurdle rate = cash flow × (1 − (1 + hurdle)^−years) ÷ hurdle − investment.
- Simple payback = investment ÷ yearly cash flow.
- Assumes: The same net cash flow arrives at the end of every year; the investment is paid at the start. For uneven cash flows, use the NPV calculator.
- Assumes: IRR shows n/a when the cash flows don't repay the investment (an IRR of 0% or less).
- Assumes: IRR assumes cash you get back is reinvested at the same rate: compare it with your hurdle rate, not on its own.
An estimate from the numbers you enter, not financial advice. Check the result against your own records before you rely on it.
Who it's for
Who uses it
Finance teams
Check a project's return against your hurdle rate.
Small businesses
Compare an equipment purchase's return with other uses of cash.
Students
See how IRR and NPV relate for a simple investment.
Good to know
What to consider
- This version assumes the same cash flow every year; for uneven cash flows, use the NPV calculator at a few rates.
- IRR is approximated by a stated method, accurate to within 0.01 percentage points in our tests.
- An estimate, not financial advice.
Questions
About the IRR Calculator
How is IRR worked out without a spreadsheet?
There is no exact formula, so it is approximated: Baily's annuity-rate formula gives a first estimate and six refining steps follow. Tests compare it with an exact solver across 1 to 50 years.
Why does IRR show n/a?
When the yearly cash flows add up to no more than the investment, the IRR is zero or negative, and this calculator shows n/a instead.
Can I share the calculator with my team or a client?
Yes. The Room keeps the calculator live: anyone with the link can change the numbers and see the result update, with the method and assumptions on the same page.
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Related tools
- NPV CalculatorWork out the net present value of an investment from the upfront cost and up to five years of cash flows at your discount rate, with the profitability index.
- Payback Period CalculatorFind how many months an investment takes to pay for itself from the monthly gain it brings, and where you stand after a period you choose.
- ROI CalculatorWork out the return on an investment, as a net amount and a percentage, and share it as a calculator anyone can adjust.