IRR Calculator

Calculate internal rate of return from initial investment and yearly cash flows.

By Konstantin Iakovlev · Updated September 2026 · Source: SEC

$
$

IRR

19.71%

NPV at Different Rates

At 5%$49,421.50
At 8%$36,679.88
At 10%$29,078.68
At 12%$22,104.49
At 15%$12,679.59

Use the IRR Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

The internal rate of return distills an investment's initial cost and its later cash flows into a single annual percentage, which makes it a natural yardstick when you are ranking competing opportunities in the 2026 market. Because it weighs when each dollar arrives, IRR already accounts for the time value of money, which a simple total-return figure does not.

IRR is the discount rate at which the net present value of all of a project's cash flows comes out to exactly zero. It satisfies the equation Initial Investment = Σ (Cash Flowt / (1 + IRR)t), where 't' marks the period. Because no clean algebraic solution exists, the calculator narrows in on the answer iteratively, refining the rate until NPV converges to zero and the investment's annual growth rate emerges.

IRR is not the same as a simple return on investment, and treating the two as interchangeable is where people go wrong: IRR weighs when each cash flow arrives, which makes it the sharper tool for long-horizon projects. Watch the reinvestment assumption baked into the math, since it can flatter returns when markets are choppy. Scale matters too, because a high IRR on a tiny outlay may move the needle far less than a moderate IRR on a large one.

Example: A $100,000 Investment in a Startup

  1. 1 Initial Investment: $100,000. Yearly Cash Flows: Year 1: $20,000, Year 2: $30,000, Year 3: $40,000, Year 4: $50,000. Enter 100000 and 20000,30000,40000,50000.
  2. 2 The calculator will take the initial outflow of $100,000 and the subsequent inflows of $20,000, $30,000, $40,000, and $50,000. It will then iteratively determine the discount rate (IRR) that makes the net present value of these cash flows equal to zero.
  3. 3 The calculated Internal Rate of Return (IRR) for this investment is approximately 12.83%: at that rate the four inflows are worth $17,726 + $23,567 + $27,851 + $30,856 = $100,000 today.
  4. 4 An IRR of 12.83% beats the S&P 500's long-run average of roughly 10% a year, but only modestly for an early-stage venture whose cash flows are far from certain; investors in startups typically want 20% or more to compensate for that risk.

Source: SEC · Last updated: September 2026

Frequently Asked Questions

What is a good IRR for an investment?
A good IRR depends on the risk level. Low-risk investments target 5-10%. Moderate-risk real estate targets 10-15%. Venture capital targets 20-30%+. The IRR should exceed your cost of capital or hurdle rate to be worthwhile.
How is IRR different from ROI?
ROI is a simple total return percentage that ignores timing. IRR accounts for when cash flows occur, giving an annualized return rate. A 50% total ROI received in one payment after 5 years works out to an IRR of about 8.4% a year. IRR is more useful for comparing investments with different time horizons.
What are the limitations of IRR?
IRR assumes reinvestment of cash flows at the same rate, which may be unrealistic. It can produce multiple values for projects with alternating positive and negative cash flows. For comparing mutually exclusive projects, NPV is more reliable than IRR.

You might also need

Compound Interest Calculator — See Your Money Grow Over Time

Calculate compound interest with regular contributions and see how your money grows with daily, monthly, or annual compounding. Free, instant results and charts.

Inflation Calculator

Calculate the impact of inflation on purchasing power over time. See how much past dollars are worth today.

Net Worth Calculator

Calculate your net worth by adding up assets (savings, investments, property) and subtracting liabilities (loans, credit cards).