IRR Calculator

What is an internal rate of return (IRR) calculation?

This IRR calculator calculates an annualized rate-of-return plus profit (loss).

• Supports dated cash flows
• Easy bulk data entry
• Save entries to a file for later recall
• Know your rate of return across multiple accounts and investments

Answers the question: "How am I doing?"

Click to Try It Now!

The IRR is an annualized rate-of-return on an investment. It is calculated using only cash flow amounts for inputs and does not depend on an interest rate, thus the term "internal." The calculator uses Newton's method to calculate the IRR.

An Internal Rate of Return Calculator (IRR) is used to calculate an investment's bottom line. You can use the results for bragging rights, or more importantly, to compare two or more different investment options.

This calculator will calculate the IRR for a complicated series of cash flows as well as the total invested, total returned and the profit (or loss). It supports both irregular length periods and exact date data entry.

On the other hand, the frequency option makes it easy to set up regular cash flows such as daily, monthly, or quarterly. (You have eleven from which to pick!)

Make sure that you check out the usage tips below (click to scroll).

IRR is a Very Useful Number because it gives the investor the ability to compare investments. That is, the IRR normalizes the results for different cash flows.

Take, for example, two rental properties that are for sale. The offer price for both buildings is about the same. Projected rents are about the same. However, one will have a higher upfront renovation cost while the other has higher property taxes. How does an investor know which purchase represents a better investment?

They can use an IRR calculator to make this determination.

A note of caution. When comparing investments, never make the comparison using internal rates of return calculated with different calculators.

Why is that?

Because two different calculators may calculate the results slightly differently, and neither one of them will necessarily be wrong either. (Consider for a moment that Microsoft Excel has two IRR functions that may calculate different IRRs for the same cash flows.) You don't need to get hung up on this idea. But it is something to be aware of so that you understand how to use the results correctly.

For the record, this calculator calculates the IRR using Newton's method and counting days (some calculators count periods).

If you want to try a calculator that uses another IRR calculation algorithm, look no farther than this site's Annual Percentage Rate (APR) calculator. The APR calculator follows the method specified in the Truth-in-Lending Act for calculating APR (which is an IRR calculation).

Calculator usage and tips

• Zero amounts have no impact on the IRR result. If you set the frequency to "Monthly," and there are only four cash flows in a year, you may leave eight initialized to 0. The same applies to 0 amounts after you've entered the final liquidation value.
• Enter the investment's current or final value as the last cash flow. If you are calculating the IRR for a stock or mutual fund, and you still own the investment, you should enter the investment's value as the last amount.
• You do not need to enter cash flows in date order. The calculator will sort them before calculating the result. This feature is handy, of course, if you realize that you missed entering a cash flow. Enter the amount in any available cell. Then change the date associated with that cell. Click "Calc" to sort.
• If you mistakenly duplicate a cash flow, set one of the duplicates to "0".
• Changing the "First Cash Flow Date" will reset the dates without clearing the values you've entered.
• Depending on the order you use "First Cash Flow Date," "Remove 0's" and "Add Series," the "First Cash Flow Date" may not be the first date in the input area. This is not a bug. Changing "First Cash Flow Date" initializes a series starting on the date selected. However, the user can change the date, or it can be removed with "Remove 0's" if the value for the start date is 0. Finally, a user can insert a series with a date before "First Cash Flow Date."
• Calendar Tip: When using the calendar, click on the month at the top to list the months, then, if needed, click on the year at the top to list years. Click to select a year, select a month, and select a day. Naturally, you can scroll through the months and days too. Or you can click on "Today" to quickly select the current date.
• If you prefer not using a calendar, single click on a date or use the [Tab] key (or [Shift][Tab]) to select a date. Then, as mentioned, type 8 digits only - no need to type the date part separators. Also, because the date is selected, you do not need to clear the prior date before typing. If your selected date format equals mm/dd/yyyy, then for Dec. 1, 2024, type 12012024.
• And don't stress out: you do not need to enter the cash flows in date order. You have a computer. It and this calculator are smart enough to sort the cash flows for you once you've clicked the "Calc" button.

And now to repeat an essential word about IRR calculators.

Different IRR calculators may use different algorithms for finding the rate-of-return. (There is no equation or formula for calculating IRR.) Therefore, don't compare the results from one IRR calculator for one investment with results from another calculator for a different investment. Always use the same calculator to compare different investments.