A walkthrough, end to end.
- 1
Enter the initial investment as a negative number, then add periodic cash flows (positive for inflows, negative for outflows).
- 2
The calculator solves for the discount rate that makes NPV equal to zero.
- 3
Compare IRR to your cost of capital — IRR > cost of capital means the project creates value.
IRR — internal rate of return
IRR is the discount rate that sets NPV to zero across a cash flow series. Solved iteratively (Newton's method or bisection) since there's no closed form. The 'rate' you'd need to earn elsewhere to match this investment's returns.
What you can do with this.
Real estate IRR
Property purchase, 5 years of rental income (after expenses), then sale. IRR captures both cash flow and appreciation. 10–15% IRR is typical for stabilized US rental real estate; 20%+ for value-add deals.
Private equity / VC IRR
PE/VC funds target 20–30% net IRR over 10-year fund life. Public market equivalent comparison: subtract S&P 500 IRR over same period to see true alpha.
Capital project IRR
Equipment investment with multi-year cash flow streams. If IRR > weighted average cost of capital (WACC), the project creates shareholder value. Most companies set hurdle rates 3–5% above WACC.
Stock investment IRR
Buy at $100, hold for 5 years receiving dividends, sell at $130. IRR captures both dividend yield and capital appreciation in a single number.
IRR limitations: multiple sign changes
When cash flows alternate signs multiple times (negative-positive-negative), IRR can have multiple solutions. Use Modified IRR (MIRR) or NPV in those cases.
IRR vs. NPV trade-off
IRR is a percentage — easy to compare. NPV is in dollars — captures scale. A 25% IRR on a $1M project beats a 30% IRR on a $50K project in absolute value. Use both.
Reinvestment rate assumption
IRR implicitly assumes intermediate cash flows reinvest at IRR — often unrealistic. MIRR uses an explicit reinvestment rate for more realistic projections on long-horizon projects.
IRR calculator 2026 — what's current
With higher base rates, project IRR hurdle rates have risen. Many corporates now require 12–15% IRR for capital projects vs. 8–10% in the low-rate era. Public equity benchmarks ~10% S&P 500 long-term.
Frequently asked.
Depends on your cost of capital and the asset class. Stocks long-term ~10%. Bonds 4–6%. Real estate 8–15%. PE/VC 20–30%. Compare against the alternative use of capital, not a universal target.
ROI is total percentage gain (no time component). IRR is the annualized rate that makes NPV zero. IRR is more useful for multi-year cash flow projects; ROI for single in/out comparisons.
Yes — when cash flows received are less than the initial investment. The calculator returns the negative IRR; useful for evaluating losses.
No. Calculations run entirely in your browser.