Solve for the internal rate of return — the discount rate at which an investment's cash flows net to zero — on a fixed recurring cash flow, or a series of irregular annual cash flows.
Computes the IRR for an investment with a fixed recurring deposit or withdrawal (or none at all).
Computes the IRR from an initial investment and a series of different annual cash flows.
IRR is the single, constant discount rate that makes an investment's entire stream of cash flows — money going out, money coming back — net to exactly zero in present-value terms. It's the same conceptual question every investment ultimately asks: what rate of return am I actually earning, given what I put in and what I got back, and when each of those happened?
Real investments don't always follow a simple "money in once, money out once" pattern. A rental property might need a mid-life capital repair; a business might require a follow-on investment round. Each of these later outflows counts against the investment just like the initial one — IRR treats every dollar the same regardless of when it left your pocket.
Use the first if your cash flows are a regular deposit or withdrawal at a fixed frequency (like a monthly distribution). Use the second if your cash flows vary year to year, as with a lumpy annual payout or an uneven series of returns.
Yes — a negative IRR simply means the investment returned less than what was put in, once time value of money is accounted for.
Generally, but IRR alone doesn't capture risk, scale (a huge IRR on a tiny investment may be less valuable in absolute dollars than a modest IRR on a large one), or how realistic the assumed cash flows actually are.
Pick another financial tool to jump straight to it.
Work out the average annual return across a series of investment gains and losses.
LiveEstimate cash flow and return on investment for a rental property.
Calculate the simple return on investment for a purchase or project.