IRR Calculator

Internal Rate of Return

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. You should also compare the results you get against what you can earn in a risk-free investment to determine the desirability of an investment.

This calculator will calculate both the IRR and Net Present Value 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).

© 2022, Pine Grove Software, LLC
$ : mm/dd/yyyy

Information

Original Size
Click to make smaller (-) or larger (+).
  • Feb. 13: Change the calculator's layout so that user can add a description to each cash flow. The description is not required.
  • Feb. 16: On smaller desktop monitors, the browser should set the calculator, by default, to an easier-to-use size — no change for mobile devices. Users can always adjust the size by clicking the '-' or '+' buttons. Please let me know if you have any difficulties. The sizing improvement will be rolled out to nearly all calculators over the coming weeks.

What is internal-rate-of-return?

IRR is an annualized rate-of-return. It is known as an "internal" rate-of-return because the algorithm used does not depend on a quoted interest rate (if there is one). To calculate an IRR, one only needs to know the projected cash flow amounts and dates they are due to occur.

In more nerdy speak, IRR is the discount rate that results in a net present value equal to 0. That is if you calculated the present value (PV) of the cash inflows (investments) and cash outflows (returns or withdrawals) using the IRR, the net would equal 0. More weight is given to the earlier cash flows than to the later cash flows because of the time value of money.

For the investor, the IRR is an essential and sometimes overlooked tool.

By annualizing a rate-of-return, one can compare investment results for two completely different cash flows and then select the better option.

Why is IRR useful beyond bragging rights?

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).

How is NPV useful?

The NPV is the calculation investors use to learn if they are paying too much for an investment (or if they could pay more) relative to the rate of return they want to earn. If the net present value is negative, the initial investment is too high for the investor to meet their goal ROR. If the NPV is positive, the investor can pay that amount more for the investment, and they'll still earn what they want to earn.

Here's an example...

Jack invests in already issued mortgages. Jack can buy a mortgage for $190,000 that has 210 remaining monthly payments of $1,235.90 each. The next payment is due on June 1. Jack wants to earn 6% on his investments.

Is this a good deal for Jack?

Follow these steps.

  1. Enter -190,000.00 for the "Initial Investment"
  2. Set "Initial Investment Date." In this case, that's the date Jack plans to purchase the mortgage. Use May 22 to follow along.
  3. Click on "Add Series." Create 210 monthly entries of $1,235.90, starting on June 1.
  4. Enter Jack's personal "Discount Rate," i.e., 6% — the ROR he wants to earn on his investments.
  5. Click "Calc"
  6. IRR = 3.847%
  7. NPV = -$27,198.22

At 3.8%, Jack will not earn the 6% he desires.

What is Jack to do?

The NPV calculation is useful here. It tells Jack that he is paying $27,198.22 too much for the investment. See for yourself. Change the "Initial Investment" to $-162,801.78 ($190,000.00 - $27,198.22) and click "Calc" again. Now we have:

  • IRR = 6.0%
  • NPV = 0.0

Jack is now a happy man assuming he can negotiate the price he needs.

Note: When the NPV is positive, that is the amount the investor can increase the initial investment by and still receive the desired ROR.

More Details

Users should find these recent enhancements useful:

  • "Add Series" option. Create repeated cash flows easily. Work with hundreds of cash flows without manual entry.
    • Creating entries with "Add Series" does not populate the existing dates with values or reset the current values. It creates NEW entries. If a cash flow entry exists on July 1, and you then use the "Add Series" feature to add monthly cash flows starting on June 1, you'll have two entries for July 1.
    • "Add Series" feature can be used to add additional "0" entries that you can manually edit. There is no longer a restriction to 96 inputs.
    • Use the "Remove 0's" feature to be left with a lean look.
  • Save feature! - save the custom URL in a document, on your desktop as a shortcut, or email it to yourself and then use it the next time to reload all your cash flows.
  • Now prints all cash flows.
  • Reset is similar to a clear feature. Besides clearing the cash flows, it also changes the dates to start from the "First Cash Flow Date" and increments them by "Cash Flow Frequency."
  • Optionally removes zero entries so as not to print.
  • Net Present Value Calculation - NPV
  • Dates created from "First Cash Flow Date" not "Initial Investment Date."
  • The IRR analysis gives the investor an additional tool that helps him or her negotiate an investment. Using this new feature, one can calculate the initial investment amount or final value that is required to result in the desired IRR.

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, 2016, type 12012016.
  • 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.

58 Comments on “Irr Calculator”

Join the conversation. Tell me what you think.
  • Is there an issue with the IRR calc? Every time I enter in my cash flow schedule and then click the calc button everything gets zeroed out.

    • No, I don’t believe there is any problem. However, I just rolled out some small changes to the site that might have caused a momentary problem at about the time you posted your question.

      Please try again. But first, before entering data, do a refresh of the page, per below (to assure you have the latest update).

      Please let me know if you still have a problem. I would test by making 2 or 3 cash flow entries before taking the time to make a lot of entries.

      If you do not see the change right away, you may have to perform a hard refresh of the page:

      Depending on your operating system all you need to do is the following key combination:

      • Windows: ctrl + F5
      • Mac/Apple: Apple + R or command + R
      • Linux: F5

      Above, from Refresh Your Cache.

      • Thank you for the quick reply. I did the cache clear and also went into my Chrome settings and cleared the cache and I keep having the same 2 issues. It either zeroes out my input if I don’t change any dates. But even weirder when I change the dates back to 2010 for the investment date and the first payment it just grays out the entire screen after I hit continue. I tried a reboot as well.

        • That does not sound good.

          Thanks for mentioning that you have the issue after changing the first cash flow date. I can duplicate the problem. The background from the message box that asks if you want to continue is not getting cleared away and it’s blocking access to the calculator.

          I can’t duplicate (yet) the clearing of the inputs when you do not change the date. Can you save your inputs to a file (before clicking calc of course) and send me the file? The email address is on the contact page.

          I’ll look at these problems this after noon and I’ll keep you posted.

          Thanks for letting me know.

      • The issue I have is that I cannot even do a file save because once I load my inputs and change the dates once that message box pops up and I click continue it grays out the screen and I have to go back or refresh.

        • I had understood that if you DON’T change dates the inputs would clear when you click calculate. Am I wrong?

          If that’s the case, if you can click calculate, then you should be able to click on file save.

        • I see what the problem was, AND IT IS NOW FIXED. If a user had changed the "First Cash Flow Date" by typing, the calculator would become unresponsive. (Changing the date using the calendar always had worked.)

          I guess I had always tested the calculator using the calendar. The key to me seeing the problem was when you mentioned that you set the year to 2010. It wasn’t until then that I tried changing the date by typing. 🙁

  • I am also having issues with the IRR calculator:
    When entering 5 or more cashflow series it zeroes out all the numbers in the calculations fields and I have to go back and reenter all the data again.
    If I get to 5 cashflow series added, it does it again. I changed the “first cashflow date” to a date prior to when my first cashflow started and it still happens.
    I am able to enter multiple single cashflows with 1 month entry ( as in a down payment, or 1 time event). But the entry of multiple “amortization schedules” keep zeroing the table.
    I had some of the “am schedules” that started on the same dates and figured that may be causing the issue, but when I changed them and added 5 cashflow series it zeroes out again.

    • Sorry you are having a problem. However, unfortunately I’m not following you.

      Are you saying that you use the "Add series" button and you can add a series 4 times, but when you add a 5th series, the prior entries are zeroed out?

      I just tested, and I was able to add 5 series without a problem. I added 12 periods, 5 times with each being for a different amount but the same dates and nothing was wiped out.

      If you could document the steps you are taking and when you have the problem, I’m happy to take a look (and fix any problems). But if I can’t duplicate the problem, I can’t fix it.

    • Additionally, what did you mean by "I’m also having issues"? Did you have other problems when trying another calculator?

    • Thank you for providing an example, Spencer. I’m able to duplicate the problem. I have to diagnose why the values are zeroed out though. I see a message that the date calculation is trying to insert a ‘bad year’.

      I will let you know when this is fixed – hopefully, before the weekend.

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