IRR Calculator
Find the internal rate of return — the discount rate that makes a series of cash flows break even.
IRR
8.6631%
- Total cash in minus out
- 22,000.00
Show the work
The IRR is the rate r that makes the net present value 0
NPV(r) = Σ CFt ÷ (1 + r) to the power of t = 0
−70,000.00 + 12,000.00 ÷ (1 + r) to the power of 1 + 15,000.00 ÷ (1 + r) to the power of 2 + … + 26,000.00 ÷ (1 + r) to the power of 5 = 0
Try rates from −99% upward until the NPV flips between plus and minus
NPV(8.5%) = 338.32; NPV(9%) = −691.18
IRR is between 8.5% and 9%
Narrow it down: try the middle rate, keep the half where the NPV flips, repeat until the gap is under 10 to the power of −14
r = (low + high) ÷ 2
NPV(r) = 0.00 at r = 8.6631%
Estimates for general information only — not financial advice.
How it works
IRR is the rate r where Σ CFₜ ÷ (1 + r)^t = 0; found by bracketing the sign change and bisecting
Questions
- How does the IRR calculator work?
- IRR is the rate r where Σ CFₜ ÷ (1 + r)^t = 0; found by bracketing the sign change and bisecting.
- What do I need to enter?
- Cash flows from today on. Optional fields can be left blank.
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