IRR Calculator
Internal rate of return on an uneven cash flow series — with MIRR beside it, because IRR quietly assumes you can reinvest every payment at the IRR itself, and a warning when your cash flows admit more than one valid answer.
Free · No signup · Runs entirely in your browser
The rate that makes a project's net present value zero. Reported here alongside the two things an IRR on its own will not tell you: what the return becomes once you reinvest at a rate you could actually get, and whether your cash flows admit more than one valid answer.
Paid today. Entered positive, counted as an outflow.
Your cost of capital. Used for NPV.
What returns actually earn once received. Used for MIRR.
| Period | Cash flow | Discounted at 10% | Running total |
|---|---|---|---|
| Today | -$10,000 | -$10,000 | -$10,000 |
| Year 1 | $2,727 | -$7,000 | |
| Year 2 | $3,306 | -$3,000 | |
| Year 3 | $3,757 | $2,000 | |
| Year 4 | $2,049 | $5,000 |
IRR assumes every payment you receive is reinvested at 18.03% — the IRR itself. Reinvesting at 8% instead gives 13.92%, which is 4.1 points lower. That gap is the part of the headline return that depends on an assumption nobody stated.
Two limits worth knowing. IRR says nothing about scale — a 60% return on $1,000 beats a 20% return on $10m by this measure and is worth a fraction as much, which is why NPV is the better tiebreaker between projects. And these periods are annual and evenly spaced; money arriving mid-year is treated as arriving at year end.
The return on building something depends on how fast it ships. If you are building largely on your own, Tekk turns what you want into specs your coding agent can actually execute.
The calculation
NPV(r) = Σ cash flow at t ÷ (1 + r)^t
IRR = the r where NPV(r) = 0
There is nothing to rearrange. IRR is the root of a polynomial, so it is found by searching rather than solving — trying rates until net present value crosses zero. Every tool on this subject is running that search.
Worked example
$10,000 out today, then four years of returns. Discount rate 10%, reinvestment 8%.
| Period | Cash flow | Discounted at 10% | Running total |
|---|---|---|---|
| Today | −$10,000 | −$10,000 | −$10,000 |
| Year 1 | $3,000 | $2,727 | −$7,000 |
| Year 2 | $4,000 | $3,306 | −$3,000 |
| Year 3 | $5,000 | $3,757 | $2,000 |
| Year 4 | $3,000 | $2,049 | $5,000 |
| IRR | 18.03% |
| MIRR at 8% reinvestment | 13.92% |
| NPV at 10% | $1,839 |
| Payback | 2.6 years |
The assumption inside IRR
IRR does not merely report a return. It assumes every payment you receive is reinvested at the IRR itself — that the $3,000 arriving in year one goes back out earning 18.03% for the remaining three years.
It does not. It goes into the business at whatever the business actually earns.
MIRR fixes this by making the reinvestment rate an input you have to state. Above, that single change costs four points of return. And the effect scales with the number: a project reporting 60% is assuming you have somewhere to put the proceeds at 60%, which almost nobody does. IRR flatters exactly the projects it is most often used to justify.
The relationship is worth stating precisely — MIRR equals IRR only when the reinvestment rate equals the IRR. That identity is what the assumption looks like written down.
When there is more than one answer
This is the sharp edge, and it is the reason to be careful with any tool that returns a single number without comment.
A cash flow series that changes direction more than once can have several rates that all make NPV zero. Take −1,000 today, +2,500 in year one, −1,540 in year two — a project with a cleanup cost at the end:
-1000 + 2500x - 1540x² = 0 where x = 1 ÷ (1 + r)
That factors exactly. The roots are x = 0.9091 and x = 0.7143, so the IRRs are 10% and 40%. Both are mathematically correct. Neither is the answer.
Most calculators return whichever their solver happens to land on and say nothing at all. This one scans the whole range, reports every root it finds, and tells you when there is not exactly one — at which point the right move is to stop using IRR for that project and judge it on NPV.
There is a related case worth knowing: two sign changes bound the number of roots at two, but do not promise that any exist. Cash flows of −100, +300, −250 have no real IRR at any rate. That is a genuine answer rather than a failure, and a solver that assumes a root exists will hand you a fabricated one.
Where IRR is the wrong tool
Ranking projects by size. IRR is a percentage and blind to scale. A 60% return on $1,000 beats 20% on $10m on this measure and is worth a fraction as much. Use NPV when they disagree.
Anything with irregular timing. These periods are evenly spaced. Money arriving mid-year is treated as arriving at year end, which understates the return slightly on every line.
Deciding whether you survive. IRR describes the quality of a return over a project's whole life and says nothing about when the cash appears. Payback is shown alongside for that reason: running out of money in month eighteen is not improved by a strong year four.
How it works
- 1
Enter what you pay and what comes back
The outlay today, then one figure per year. Add or remove years as needed. A year can be negative — a second round of investment, or a cleanup cost at the end — and that case is exactly where this irr calculator behaves differently from the rest.
- 2
Set the two rates that are usually hidden
Your discount rate, for NPV, and the rate you would actually earn on money once it comes back. The second one is what separates IRR from MIRR, and most tools never ask for it because IRR silently assumes it equals the IRR.
- 3
Read IRR against MIRR
The gap between them is the part of the headline return that rests on an assumption nobody stated. On the worked example below it is four points. On a project reporting 60%, it is very much larger.
Frequently asked questions
- What is IRR?
- The discount rate at which a project's net present value is exactly zero — the return the project earns on the money tied up in it. If your cost of capital is below the IRR, the project adds value on this measure; if it is above, it does not.
- How do you calculate IRR?
- There is no formula to rearrange. IRR is the root of a polynomial, so it has to be solved numerically — a computer tries rates until net present value crosses zero. That is why every irr calculator, including this one, is running a search rather than evaluating an expression.
- What is a good IRR?
- It only means anything next to your cost of capital. A 15% IRR is excellent against 8% capital and value-destroying against 20%. An irr calculator will give you the rate; it cannot tell you the hurdle it has to clear. Venture funds typically target 25-30% net, corporate projects nearer 10-15%.
- What is the difference between IRR and MIRR?
- IRR assumes every payment you receive is reinvested at the IRR itself. MIRR makes you state the reinvestment rate instead. The worked example returns 18.03% by IRR and 13.92% by MIRR at a realistic 8% — and the higher the IRR, the more fictional the assumption, so IRR flatters exactly the projects it is most used to justify.
- Can a project have more than one IRR?
- Yes, and it is the sharpest edge on this measure. Any series whose cash flows change direction more than once can have several rates that all make NPV zero. Cash flows of −1,000, +2,500, −1,540 have IRRs of exactly 10% and 40%. Both are correct, neither is the answer, and most calculators return whichever their solver reaches first without mentioning the other.
- Why does my project show no IRR at all?
- Two reasons. Either the cash flows never change sign — all outflows or all inflows, so nothing was invested and there is no return on anything — or the series genuinely has no real root. Cash flows of −100, +300, −250 have none at any rate. That is a real answer, not a failure, and the honest response is to use NPV.
- Should I use IRR or NPV to choose between projects?
- NPV, when they disagree. IRR is a percentage and so is blind to scale: 60% on $1,000 beats 20% on $10m by this measure while being worth a fraction as much. IRR is useful for asking whether one project clears a hurdle, and unreliable for ranking two against each other.
- How does an irr internal rate of return calculator handle uneven cash flows?
- That is the case it exists for. A flat, even series has simpler methods available; the reason to reach for an irr internal rate of return calculator is precisely that the amounts differ each period. Each flow is discounted by its own period count, so year three is divided by (1 + r) cubed regardless of what years one and two contained.
- What discount rate should I use?
- Your weighted average cost of capital, or the return available on the next-best use of the same money. For an early-stage company that is usually higher than it feels — the alternative to a project is rarely a bank account, it is the other project you did not fund.
- Does this handle monthly or quarterly periods?
- The arithmetic is period-agnostic, so you can enter monthly figures and read the result as a monthly rate. Annualising it means compounding rather than multiplying: a 1.5% monthly IRR is 19.6% a year, not 18%. The labels here say years because that is the common case.
- Why is payback shown as well?
- Because it answers a different question, and often the more urgent one. An irr calculator measures the quality of a return over the project's life; payback measures how long your money is at risk. A company that runs out of cash in month eighteen is not helped by a strong return in year four.
- Do you store the numbers I enter?
- No. The calculation runs entirely in your browser. Nothing is sent to a server, nothing is logged, and there is no account — worth knowing before you type real deal figures into a web page.
- Why is this free, and what is Tekk?
- Tekk is a spec-driven development platform for people building software with AI coding agents. This calculator costs us nothing to run, and the return on building something depends mostly on how fast it ships. No signup, no run limit, no upsell inside the tool.
Want a real spec for what you’re building?
Drop a sentence. Tekk grounds it in your actual code and turns it into an executable plan.
Free to try · Connect GitHub during signup