IRR Calculator
Internal Rate of Return for investments.
Future Inflows ($)
Yr 1
Yr 2
Yr 3
What is IRR?
The Internal Rate of Return (IRR) is the specific interest rate that makes the Net Present Value (NPV) of all cash flows equal to zero. In simple terms, it's the "break-even" interest rate for an investment.
When to use IRR?
IRR is perfect for analyzing investments with irregular cash flows (e.g., buying a rental property where rents vary, or a business where profits fluctuate), unlike ROI which only looks at start and end points.
Decision Rule
Generally, if the IRR is higher than your Cost of Capital (e.g., the interest rate on a loan used to fund the project), the investment is profitable.