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Investing

IRR Calculator

Enter your initial investment and annual cash flows to instantly calculate the Internal Rate of Return (IRR) and NPV.

Updated June 2026 · Editorial standards

Cash Flows

$
$
$
$
$
$
Internal Rate of Return
15.24%
NPV at 10% Discount
$13,724
Payback Period
3.3 yrs

Your IRR is 15.24% on a $100,000 investment. This exceeds a 10% hurdle rate — NPV is positive.IRR is the discount rate that makes NPV = 0. Compare it to your cost of capital or minimum acceptable return. A project is attractive when IRR exceeds your hurdle rate.

By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the irr calculator — internal rate of return?

In short

IRR (Internal Rate of Return) is the discount rate that makes the net present value (NPV) of an investment equal to zero. A project is attractive when IRR exceeds your hurdle rate or cost of capital. The S&P 500 has historically returned ~10% annualized, making that a common benchmark.

This calculator computes the IRR and NPV for an investment with up to 5 years of cash flows using the Newton-Raphson iterative method.

How to use this calculator

  1. 1Enter the initial investment (a cash outflow).
  2. 2Enter expected cash flows for years 1–5.
  3. 3Compare the IRR to your hurdle rate — if IRR > hurdle rate, the investment adds value.

The formula

0=−Initial+CF₁(1+r)1+…+CF_n(1+r)n

Solve for r (the IRR) using Newton-Raphson iteration.

NPV = −Initial + CF₁/(1+r)¹ + CF₂/(1+r)² + … + CF_n/(1+r)^n = 0; Solve for r
CF_n
— Cash flow in year n
r
— IRR (discount rate where NPV = 0)
n
— Year number

Worked example

The scenario

$100K investment with cash flows of $25K, $30K, $35K, $35K, $40K over 5 years.

gives

The result

IRR ≈ 20.2%. Since 20.2% > 10% hurdle rate, NPV is positive — this is an attractive investment.

Common use cases

  • Compare multiple investment projects on a single metric.
  • Evaluate whether a business acquisition meets return requirements.
  • Assess real estate deals against financing costs.
  • Benchmark startup investments against venture return expectations.

Limitations & assumptions

  • Assumes cash flows are reinvested at the IRR rate (often optimistic).
  • Multiple sign changes in cash flows can produce multiple IRRs.
  • Does not account for project scale — a small project with high IRR may add less value than a large one.
  • Use alongside NPV for a complete picture.

Frequently asked questions

It depends on the investment type and risk. For real estate, 15–20% is strong. For stocks, matching or beating the S&P 500's ~10% is the baseline. For venture capital, 25%+ is typical. Always compare to your cost of capital.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.