IRR (Internal Rate of Return) Calculator
IRR = the discount rate that makes NPV = 0. Solved numerically via Newton's method.
Result
IRR
20.5259%
Compare to your hurdle rate.
- Initial$100,000.00
- Cash flows$25,000, $30,000, $35,000, $40,000, $50,000
- IRR20.5259%
- NPV at IRR (sanity)0.0000
Step-by-step
- Solve r where NPV(r) = -100000 + Σ CF_t / (1+r)^t = 0.
- Newton's method converges to r ≈ 20.5259%.
- Verify: NPV(0.2053) ≈ 0.00 (should be near 0).
How to use this calculator
- Enter initial investment.
- List annual cash flows.
- Read IRR; compare to your hurdle rate.
About this calculator
IRR is the discount rate that makes NPV exactly zero — the project's break-even rate. If IRR > your required return (hurdle rate), accept. Solved numerically because there's no closed-form for general cash flows. Beware: with non-conventional flows (sign changes), IRR can be multiple-valued or undefined; use NPV instead in those cases.
Frequently asked
For mutually exclusive projects of different scale or timing, IRR can rank wrong. NPV always picks the wealth-maximizing choice.
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