IRR Calculator
IRR based on fixed cash flow
Computes IRR from an initial investment, optional recurring deposits or withdrawals, and an ending balance.
Calculation Results
| Internal Rate of Return (IRR) | — |
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How to Use This IRR Calculator
ROI tells you profit; IRR tells you the annualized yield on every dollar and when it moved. I use this for rental properties, PE co-investments, and even "I put in $5K, added $200/month, ended at $18K—what rate is that?" scenarios with regular interim flows.
- Enter initial investment. This is cash out the door at the start (positive number in the form).
- Set holding period. Enter years, months, or both until the ending balance date.
- Enter ending balance. Value of the investment at the end of the holding period.
- Add recurring flows (optional). Enter per-period deposit or withdrawal amount, flow type, frequency, and payment timing.
- Press Calculate. Review IRR as an annualized percentage.
For a simple two-point return without interim flows, try the ROI Calculator. For full TVM flexibility, see the Finance Calculator.
IRR Formulas and Practical Applications
IRR is the rate where all cash flows—initial outlay, interim deposits/withdrawals, and ending value—discount back to net zero. It's the breakeven yield that makes the project "fair" in NPV terms.
NPV at rate r
NPV = Σ [ CFt / (1 + r)t ] = 0
Invest $5,000, receive $10,000 after 5 years with no interim flows → IRR about 14.87%. Add monthly deposits and the solver finds the rate that balances the entire stream.
IRR vs ROI
ROI ignores timing within the period; IRR weights when cash moved. Two investments with identical ROI can have different IRRs if contributions happened early vs late.
Frequently Asked Questions
What is IRR?
Internal Rate of Return is the annual discount rate that makes net present value of all cash flows equal to zero. It summarizes investment performance as a single percentage.
How do deposits and withdrawals work?
Enter the per-period amount and choose Deposit or Withdraw as flow type. The calculator applies these at the selected frequency and timing.
Can I enter years and months for holding period?
Yes. Years and months combine into total holding time for the IRR calculation.
Does IRR assume reinvestment at the same rate?
Classic IRR interpretation assumes interim cash flows reinvest at the IRR itself, which may not match real reinvestment opportunities.
When might IRR be misleading?
Projects with multiple sign changes in cash flows can have multiple IRR solutions. Very short horizons or tiny denominators can also produce extreme IRR values.