IRR Calculator
Calculate Internal Rate of Return from a series of cash flows, monthly or yearly. Compare investments with confidence.
Enter the initial investment as a negative value, then each period's net cash flow in order.
IRR per period
11.18%
Return per year
Annualised IRR
11.18%
Same as per-period rate
IRR is the discount rate at which the net present value of all cash flows is zero. Use it to compare projects of different sizes — a higher IRR means a better return per rupee invested. Requires at least one positive and one negative cash flow.
Last updated: August 2026
How this calculator is verified
Checked by True Calculator automated test suite on
- Formula verified against a published worked example in the automated test suite
- Edge cases (zero, negative, boundary and unit-mismatch inputs) covered by unit tests
The full verification method is on our how we verify page. Found an error? Tell us and we will re-check it.
When to Use This Calculator
Use this calculator when you need to judge the true annualised return of any investment with multiple cash flows — business equipment, a rental property, a private loan, or a lump-sum-plus-withdrawal pattern. Unlike ROI, which divides total profit by the amount invested, IRR respects timing: early cash flows are worth more than later ones, which is why two projects with identical total profit can have very different IRRs. For Indian small businesses this makes it the standard screen for comparing a new machine against a bank FD or an alternative project. The monthly mode extends it to EMIs and SIPs, converting a monthly rate into the annualised figure quoted in loan and fund documents. It requires at least one negative and one positive flow; when the tool returns no result, check the sign pattern of your inputs.
How to Use This Calculator
- Step 1: Choose whether your cash flows occur yearly or monthly.
- Step 2: Enter the initial investment as a negative number — the money leaving your pocket at the start.
- Step 3: Add each period's net cash flow in order, using the + button for additional periods.
- Step 4: Read the IRR per period and the annualised rate; if no rate exists, the tool shows a hint instead of a result.
Worked Example
A small business owner invests ₹1,00,000 in a machine that returns ₹30,000, ₹30,000, ₹40,000 and ₹30,000 over the next four years. The IRR of these annual cash flows is 11.18% per year — the rate at which the discounted inflows exactly offset the outlay. For comparison, ₹50,000 invested for inflows of ₹20,000, ₹25,000 and ₹25,000 produces an IRR of 18.14%, showing that smaller projects can return better rates.
Tips and Common Mistakes
- •Tip 1: Enter cash flows in the correct order — the tool assumes each period follows the previous one.
- •Tip 2: Use monthly mode for SIP-style investments and loan repayment analyses to get the annualised rate.
- •Tip 3: Compare IRR across projects only when the investment sizes and risks are similar.
- ✗Mistake 1: Avoid using IRR when cash flows change sign more than once — multiple rates can satisfy the equation, and NPV is safer.
- ✗Mistake 2: Avoid treating IRR as profit percentage — it is a rate of return on the cash-flow pattern, not a margin.
Frequently Asked Questions
What is IRR?
The Internal Rate of Return is the discount rate at which the net present value of a series of cash flows becomes zero. For the example flows −₹1,00,000 followed by ₹30,000, ₹30,000, ₹40,000 and ₹30,000, the IRR is 11.18% per year.
How is IRR different from ROI?
ROI is total profit divided by investment and ignores timing. IRR accounts for when money flows — it is the annualised return of the cash-flow pattern, making it better for comparing projects with different timings. For the same total profit, earlier cash flows produce a higher IRR.
What is the difference between IRR and XIRR?
IRR assumes equal time gaps between cash flows; XIRR handles irregular dates. Indian mutual fund statements and loan quotes usually show XIRR. This calculator assumes a regular monthly or yearly pattern — use XIRR-style tools for irregular cash flows.
Why can IRR fail to exist or be misleading?
If all cash flows are positive (or all negative), no rate makes the NPV zero, so the calculator returns no result. With multiple sign changes, several IRRs can satisfy the equation — in such cases compare projects using NPV at your cost of capital instead.
How do I use monthly vs yearly cash flows?
Enter the initial investment as a negative number, then each period's net cash flow in order. If flows are monthly, the per-period rate is a monthly figure and the annualised IRR compounds it to a yearly rate — essential for comparing monthly SIP-like flows with annual returns.
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