Calculate the internal rate of return, NPV, and payback period for a series of cash flows.
Enter Cash Flows
Fill in your initial investment and yearly cash inflows to calculate the IRR and NPV.
An IRR calculator (internal rate of return calculator) estimates the internal rate of return, net present value (NPV), and payback period for a stream of cash flows — an initial outlay followed by a series of expected returns. In effect it doubles as an NPV calculator and a general-purpose discounted cash flow calculator, running a full analysis on whatever numbers you enter. It's the same core analysis used in corporate capital budgeting, private equity deal screening, and personal investment decisions where money goes out now and comes back over several years.
You enter an initial investment, add one row per year of expected cash inflow, and set a discount rate (your required or hurdle rate). The calculator solves for IRR numerically using bisection — testing discount rates until it finds the one where the NPV of all discounted cash flows equals zero — since most cash flow series have no closed-form algebraic solution. It also computes NPV at your chosen discount rate and the payback period (how long it takes cumulative inflows to recover the initial investment), so a single run gives you all three numbers together, plus an Accept/Reject verdict against your hurdle rate.
Business owners evaluating a capital project or expansion, private equity and venture investors screening a deal's expected return, corporate finance students learning capital budgeting, and individual investors sizing up a rental property, franchise, or other multi-year investment with irregular cash flows.
IRR gives you a single percentage you can compare directly against your cost of capital or alternative investment options — if IRR exceeds your hurdle rate, the investment is projected to create value. It's widely used to rank competing projects, evaluate business expansions, and assess whether a private investment's expected returns justify its risk relative to other opportunities. Pairing the internal rate of return with NPV and payback period gives a fuller picture than any single discounted cash flow metric on its own — a strength this calculator is built around.
IRR is the discount rate that makes the net present value of all cash flows equal to zero
Compare IRR to your required rate of return (hurdle rate or discount rate). If IRR is greater than your hurdle rate, the investment is expected to add value; if lower, it's expected to destroy value.
NPV shows the dollar value created at a specific discount rate. IRR shows the break-even rate itself. For comparing mutually exclusive projects of different sizes, NPV is often considered the more reliable metric.
The payback period shows how many years it takes for cumulative cash inflows to recover the initial investment — it ignores the time value of money, so use it alongside IRR and NPV, not instead of them.
From cash flows to a full discounted cash flow analysis in under a minute
Input your Year 0 cash outflow as a positive number — the calculator treats it as negative in the underlying math automatically.
Use "+ Add Year" to add one row per year of projected inflow, and remove rows with the × button if your horizon is shorter.
Enter your required rate of return — this is used to calculate NPV and to compare against the computed IRR for the Accept/Reject verdict.
The calculator solves for IRR numerically using bisection, since most cash flow series have no closed-form algebraic solution.
See the IRR, NPV at your discount rate, total cash inflows, net profit, payback period, an Accept/Reject verdict, and cash flow charts.
A realistic 4-year cash flow series, solved step by step
Suppose you invest $10,000 today and expect cash inflows of $3,000, $4,000, $5,000, and $4,000 over the next four years. Your required rate of return (hurdle rate) is 10%.
Explanation: Because the computed IRR (20.50%) is well above the 10% hurdle rate, this project would be flagged Accept — the cash flows are projected to earn more than double your required return. The positive NPV of $2,521.87 tells you the same thing in dollar terms: at your 10% required return, this investment is expected to create roughly $2,522 of value above and beyond what you put in, in today's money.
Sensitivity check: Total undiscounted cash inflows are $3,000 + $4,000 + $5,000 + $4,000 = $16,000 against a $10,000 outlay, for a net profit of $6,000 — but that ignores the time value of money. NPV and IRR both correctly discount later cash flows more heavily, which is why a discounted cash flow analysis gives a more accurate picture than simply summing the raw numbers.
What your IRR, NPV, and Accept/Reject verdict actually tell you
The gap between your IRR and your discount rate (hurdle rate) is the clearest single signal this calculator gives you — the wider the gap, the more cushion the investment has against overly optimistic assumptions.
| IRR vs. Hurdle Rate | General Read | Typical Context |
|---|---|---|
| IRR below hurdle rate | Reject — projected to destroy value | Returns don't clear your required rate |
| IRR 0–10 points above hurdle rate | Marginal accept — limited cushion | Reasonable case, but sensitive to assumption changes |
| IRR 10+ points above hurdle rate | Strong accept — solid cushion | Comfortably clears the required return, more room for error |
For capital budgeting: a positive NPV and an IRR above your hurdle rate both point the same direction — toward accepting the project — but when comparing multiple projects of very different sizes, lean on NPV for the dollar impact rather than ranking purely by IRR percentage.
For personal investment decisions: use the payback period alongside IRR and NPV if capital recovery speed matters to you (e.g. limited liquidity) — a project with a slightly lower IRR but faster payback may suit your situation better than the numerically "best" IRR.
Risk considerations: this calculator assumes your entered cash flows will actually occur as projected and that they can be reinvested at the IRR itself — a well-known theoretical limitation of IRR. Real projects carry execution risk, market risk, and estimation error that no discounted cash flow formula can eliminate.
This tool provides general financial estimates for educational purposes only and does not constitute personalized investment or business advice. Past performance isn't a guarantee of future results, and projected cash flows may not materialize. Consult a licensed financial advisor or accountant before making a capital investment decision.
Where this IRR calculator earns its keep
Decide whether a business expansion or equipment purchase clears your required rate of return.
Model a property's projected cash flows and resale value before committing to a purchase.
Compare IRR and NPV across projects with different cash flow timing and sizes.
Evaluate whether a private investment's expected returns justify its risk relative to your hurdle rate.
Work through capital budgeting problems and see the bisection method in action.
Re-run the same cash flows with more conservative assumptions to stress-test a project's IRR.
Check the payback period alongside IRR when liquidity or recovery speed matters.
Model cash flows in any of 10 currencies for international investments or projects.
Generate a quick IRR, NPV, and payback summary to support a deal write-up or pitch.
What this IRR calculator does well, and where it can't replace professional advice
Three metrics from one cash flow series — each answers a different question
| Feature | IRR | NPV | Payback Period |
|---|---|---|---|
| What it answers | What annualized return does this generate? | How much value does this create in dollars? | How fast do I recover my capital? |
| Units | Percentage | Currency amount | Years |
| Time value of money | Accounted for | Accounted for | Ignored |
| Best for | Comparing against a hurdle rate | Comparing projects of different sizes | Assessing liquidity/recovery risk |
| Key weakness | Can misrank differently sized projects | Doesn't give an intuitive rate | Ignores cash flows after payback |
Common questions about IRR and cash flow analysis
Official guidance to complement this calculator — not a substitute for licensed financial advice
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