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Finance Calculators
IRR (Internal Rate of Return) Calculator
Estimate the internal rate of return (IRR) of an investment given its initial cost and uniform annual cash flow.
Internal rate of return (IRR)
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About the IRR (Internal Rate of Return) Calculator
The internal rate of return (IRR) is the discount rate at which an investment's net present value equals exactly zero, in other words, the annualized return the investment is expected to deliver.
Formula: IRR is the rate r that solves 0 = −Initial Investment + ∑ [Cash Flowt ÷ (1 + r)t], found here using iterative approximation.
An investment is generally attractive when its IRR exceeds your required rate of return (hurdle rate), the higher the IRR, the more efficiently the investment generates returns.
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