Internal Rate of Return (IRR) Calculator
The Internal Rate of Return (IRR) is the annualised discount rate that makes the net present value (NPV) of all cash flows equal to zero. A higher IRR means a more attractive project — if IRR exceeds your cost of capital, the investment adds value.
The discount rate at which net present value equals zero
How does this calculator work?
IRR is the discount rate that makes NPV = 0 across the full cash flow stream. Enter your upfront investment and comma-separated annual inflows; the calculator solves it numerically via bisection. Accept the project if IRR exceeds your cost of capital (e.g. WACC).
Formula
How this is calculated
IRR is defined as the discount rate r that satisfies NPV = 0 when applied to the full stream of cash flows: the upfront investment (negative) followed by the annual inflows (positive). Because the equation is polynomial in r it has no closed-form solution — this calculator solves it numerically using the bisection method, which brackets the root between a very low and a very high rate and halves the interval up to 200 times until the result converges to within 10⁻⁹ accuracy.
Once found, the IRR is displayed as an annualised percentage. The NPV-vs-rate chart shows how the present value of the project changes as the discount rate rises; the curve crosses zero exactly at the IRR. Compare the IRR to your weighted-average cost of capital (WACC) or required rate of return: accept the project if IRR > WACC.
Limitations to keep in mind: IRR assumes all intermediate cash flows are reinvested at the IRR itself, which can be over-optimistic for high-IRR projects (Modified IRR addresses this). Projects with alternating positive and negative cash flows can have multiple IRRs or none, so this calculator reports "no result" in those cases.
Frequently asked questions
It depends on the cost of capital. A rule of thumb is that any project with IRR above the company's WACC (typically 8–15% for most businesses) adds value. Private equity funds typically target 20%+ IRRs; low-risk real estate might target 8–12%.
NPV gives the absolute monetary gain (in dollars) at a specific discount rate; IRR gives the breakeven rate as a percentage. Both use discounted cash flows. NPV is generally preferred for comparing projects of different sizes; IRR for quick "hurdle-rate" comparisons.
IRR requires at least one sign change in the cash flow stream — a negative initial outflow followed by positive inflows (or vice versa). If all cash flows have the same sign, or if the cash flow pattern changes sign multiple times, there may be no unique IRR.
Also known as
TG we-Calculate Editorial Team. (2026). Internal Rate of Return (IRR) Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/internal-rate-of-return-calculator
TG we-Calculate Editorial Team. "Internal Rate of Return (IRR) Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/internal-rate-of-return-calculator.
TG we-Calculate Editorial Team, "Internal Rate of Return (IRR) Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/internal-rate-of-return-calculator
@misc{wecalculate_internal_rate_of_return_calculator, title = {Internal Rate of Return (IRR) Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/internal-rate-of-return-calculator}}, year = {2026}, note = {TG we-Calculate} }
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