About the IRR Calculator
What is the IRR Calculator?
The internal rate of return (IRR) is the discount rate at which the net present value of all an investment's cash flows is zero. It expresses a project's profitability as a single annual percentage that can be compared with your cost of capital or target return.
Enter the cash flows year by year, starting with the initial investment as a negative number in year 0. The calculator finds the IRR, the NPV at your chosen discount rate and the modified IRR (MIRR), which assumes cash is reinvested at that rate. It also warns if the cash flows could produce more than one IRR.
How to use the IRR Calculator
- Cash Flows by Year, starting with Year 0 (₹) — year 0 first (negative for the investment), then each year's net cash flow. (sample: -500000, 120000, 150000, 180000, 200000)
- Discount / Reinvestment Rate for NPV & MIRR (%) (sample: 10)
- Press Calculate IRR (results also refresh as you type). The result card shows the Internal Rate of Return (IRR), along with NPV at 10%, Decision at this discount rate and Modified IRR (MIRR).
Formula used
0 = Σ CFₜ ÷ (1 + IRR)ᵗ
- CFₜ = the cash flow in year t (negative for outflows)
- MIRR = (FV of inflows at r ÷ PV of outflows at r)^(1 ÷ n) − 1
IRR is solved numerically. Accept a project when IRR exceeds your required return (equivalently, when NPV is positive).
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Cash Flows by Year, starting with Year 0 (₹) | -500000, 120000, 150000, 180000, 200000 |
| Discount / Reinvestment Rate for NPV & MIRR (%) | 10 |
| Result | Value |
|---|---|
| Internal Rate of Return (IRR) | 10.41% |
| NPV at 10% | ₹4,897 |
| Decision at this discount rate | Accept – IRR exceeds the required rate |
| Modified IRR (MIRR) | 10.27% |
Tips for using the IRR Calculator
- For dated, irregular cash flows such as SIPs, use the XIRR Calculator instead.
- When comparing projects of very different sizes, NPV is more reliable than IRR.
- Cash flows that switch sign more than once can have multiple IRRs — rely on NPV or MIRR then.