IRR Calculator: Internal Rate of Return

Q: How is IRR different from ROI on this page?

ROI here would be simple profit divided by cost. IRR is the annual discount rate that sets NPV to zero, so earlier inflows count more than later ones. Use the ROI Calculator for one-shot percentage return; use this tool when cash flows arrive in different years.

Q: How does MIRR work in this calculator?

Check Show modified IRR (MIRR) in section 02. Negative flows discount at the hurdle rate (also the financing rate—no separate financing field). Positive flows compound forward at the reinvestment rate (default 5%). MIRR is usually lower than plain IRR when reinvestment is more conservative than the solved IRR.

Q: What do NPV @ hurdle and “Vs hurdle” mean?

NPV @ hurdle discounts all flows at your hurdle rate (section 02). Positive NPV means the project beats that benchmark in present-value dollars. Vs hurdle is IRR minus the hurdle in percentage points. Strategy chips on the dark card classify IRR: High return above 20%, Above hurdle or Below hurdle versus section 02, Negative IRR or Subpar vs hurdle for weaker outcomes, and Invalid cash flows when signs never mix.

Q: What does the sensitivity panel test?

It reduces only the final year’s cash flow by 10% and recomputes IRR. It does not stress every year or model probability—use it to sanity-check exit assumptions, not operating volatility in earlier periods.

Year	Cash flow
Year 1	$
Year 2	$
Year 3	$
Year 4	$
Year 5	$

Reading the IRR results panel

The dark card shows IRR, spread versus your hurdle, NPV at that hurdle, and net inflow/outflow totals.

Example: $10,000 out, five annual inflows

By default: initial investment $10,000 (entered positive, treated as outflow), years 1–5 inflows $2K / $3K / $4K / $5K / $15K, hurdle 8%. IRR ≈ 33.40%, NPV @ hurdle ≈ +$11,483, spread ≈ +25.40 pp, net return $19,000 ($29,000 in − $10,000 out). With MIRR enabled (reinvest 5%): MIRR ≈ 25.04%. Final-year sensitivity (−10% on year 5): IRR ≈ 31.97% (~1.43 pp lower). Chip: High return.

Strategy chips

The chip beside IRR classifies the headline rate: High return when IRR exceeds 20%; Above hurdle or Below hurdle when IRR is compared to section 02; Negative IRR or Subpar vs hurdle for weaker outcomes; Invalid cash flows when signs never mix. Chips are fixed UI thresholds—not personalized advice.

IRR calculator: internal rate of return

Annual cash-flow IRR with hurdle NPV, optional MIRR, and final-year sensitivity. Illustrative—not investment, tax, or lending advice.

What this calculator does

Solves IRR from an upfront outflow and yearly amounts (sections 01–02), with hurdle NPV, optional MIRR, and final-year sensitivity on the results card.

How the math works

IRR is the rate r where present value of all flows equals zero:

\text{NPV} = CF_0 + \sum_{t=1}^{n} \frac{CF_t}{(1+r)^t} = 0

Newton-Raphson iteration solves for r. NPV @ hurdle substitutes your hurdle for r without solving for zero.

MIRR compounds positive flows at the reinvestment rate and discounts negatives at the hurdle (financing) rate:

\text{MIRR} = \left(\frac{FV_{\text{positive}}}{PV_{\text{negative}}}\right)^{1/n} - 1

That yields one rate when sign changes would otherwise allow multiple IRR roots.

Limits of the model

Annual periods only—no calendar dates, monthly compounding inside a year, taxes, fees, or leverage schedules. Sensitivity adjusts the final row only. For simple return on one buy/sell, see the ROI Calculator; for contribution growth with fees, see the Investment Calculator.

IRR Calculator FAQ

How is IRR different from ROI on this page?

ROI here would be simple profit divided by cost. IRR is the annual discount rate that sets NPV to zero, so earlier inflows count more than later ones. Use the ROI Calculator for one-shot percentage return; use this tool when cash flows arrive in different years.

Why might I see a “Multiple IRR possible” warning?

If cash flows change sign more than once (invest → earn → invest again → exit), the NPV equation can have more than one rate that solves to zero. The widget flags that pattern. Enable MIRR in section 02 for a single answer that uses the hurdle as the financing rate and your reinvestment rate on positive flows.

How does MIRR work in this calculator?

Check Show modified IRR (MIRR) in section 02. Negative flows discount at the hurdle rate (also the financing rate—no separate financing field). Positive flows compound forward at the reinvestment rate (default 5%). MIRR is usually lower than plain IRR when reinvestment is more conservative than the solved IRR.

What do NPV @ hurdle and “Vs hurdle” mean?

NPV @ hurdle discounts all flows at your hurdle rate (section 02). Positive NPV means the project beats that benchmark in present-value dollars. Vs hurdle is IRR minus the hurdle in percentage points. Strategy chips on the dark card classify IRR: High return above 20%, Above hurdle or Below hurdle versus section 02, Negative IRR or Subpar vs hurdle for weaker outcomes, and Invalid cash flows when signs never mix.

What does the sensitivity panel test?

It reduces only the final year’s cash flow by 10% and recomputes IRR. It does not stress every year or model probability—use it to sanity-check exit assumptions, not operating volatility in earlier periods.

Can I enter dated or monthly cash flows?

No. Rows are year 1, year 2, and so on with one amount per period—annual spacing only. For uneven timing within a year, approximate with the closest year or use the Present Value Calculator on individual amounts. Not a substitute for a full DCF workbook or tax-aware deal model.

Sources & citations

References used for the calculation method and definitions. Links open in a new tab when available.

[1]

Investor.gov – Annual Return (Rate of Return)

SEC investor education on annualized return concepts used alongside IRR and hurdle comparisons.

[2]

Investor.gov – Compound Interest Calculator

SEC overview of time value of money and compound growth—the basis for discounting cash flows in NPV and IRR.

Financial Estimation Note

General Projections: Results are mathematical estimates based on the rates and formulas currently loaded for this tool, including year-specific tax data where noted. They are intended for high-level planning only.

No Advice Provided: This site does not provide financial, tax, or legal advice. Using this tool does not create a client-advisor relationship with CalcRegistry.

Confirm Numbers: Financial laws change frequently. Please verify all results with a qualified professional (CPA, Financial Planner, or Lawyer) before making significant financial decisions.

IRR Calculator: Internal Rate of Return & Hurdle NPV

Cash flows

By year

Hurdle & MIRR

How to use this calculator