IRR Calculator: Internal Rate of Return and NPV of Cash Flows
Enter an investment's cash flows period by period to find the internal rate of return, and the net present value at a discount rate you choose
By the Monthly Income Booster editorial team · Updated · How we research and fact-check
On this topic
IRR Calculator: Internal Rate of Return and NPV of Cash Flows
Printed 2026-10-27 from billorganizingapp.com/income/calculators/irr/ — an estimate for planning, not financial or tax advice.
Keep your budget and bills on track month to month in the free Bill Organizer app.
Enter the money you put in as a negative number in period 0, then the cash you get back (or pay in) each period after, including any sale proceeds in the last period. The calculator finds the internal rate of return — the yearly rate at which the cash flows' net present value is zero — and the net present value (NPV) at a discount rate you choose. Periods are years unless you enter monthly flows, in which case the IRR is per month.
IRR and NPV formulas
NPV = CF₀ + CF₁ ÷ (1 + r) + CF₂ ÷ (1 + r)² + … + CFₙ ÷ (1 + r)ⁿ. IRR is the rate r that makes NPV = 0. There's no closed-form answer, so the calculator narrows it down by bisection, as a spreadsheet's IRR function does by iteration. For $10,000 invested and $3,000, $4,200, $6,800 back over three years, IRR is 16.34% and NPV at 8% is $1,776.66.
| Discount rate | NPV |
|---|---|
| 0% | $4,000 |
| 5% | $2,540.76 |
| 8% | $1,776.66 |
| 10% | $1,307.29 |
| 15% | $255.61 |
| 20% | $-648.15 |
Reading the result
A positive NPV at your discount rate means the cash flows return more than that rate; the IRR is where NPV crosses zero (between 15% and 20% in the table). A single lump sum that grows to $16,105 after five years has an IRR of 10.00%, the same as its compound annual growth rate. For cash flows that change sign more than once (for example a big repair partway through), there can be more than one IRR; the calculator flags that case.
Choosing a discount rate
The discount rate is the return you require or could earn elsewhere. A common benchmark for a low-risk alternative is the Treasury yield for a similar term, published in the Federal Reserve's H.15 release. Riskier projects usually call for a higher rate. IRR assumes the cash you receive along the way could be reinvested at the IRR itself, which can flatter high IRRs.
Taxes and estimates
Cash flows here are what you enter — before or after tax. Gains on a sale are capital gains (IRS Topic 409), and rental income is taxed yearly (IRS Topic 414). Future cash flows are estimates; try a low and a high case.
Option trades
For a single option bought and sold, the return on the premium paid is the simpler measure.
Official sources
Tax rules, limits and pay data change. Check the current figures with the primary source before acting on them.
Frequently Asked Questions
What is IRR?+
The internal rate of return is the yearly rate at which the present value of everything an investment pays back equals what you put in — the rate where NPV is zero.
How do you calculate IRR?+
Find the rate r where CF₀ + CF₁/(1+r) + … + CFₙ/(1+r)ⁿ = 0, by trial and error or bisection. For −$10,000 then $3,000, $4,200 and $6,800, r ≈ 16.34%.
What is the difference between IRR and NPV?+
NPV is a dollar amount at a chosen discount rate; IRR is the rate at which NPV is zero. In the example, NPV at 8% is $1,776.66 and IRR is 16.34%.
Can an investment have more than one IRR?+
Yes, when the cash flows switch between negative and positive more than once. In that case NPV at a stated discount rate is the more reliable measure.
Is IRR the same as annual return?+
For a single investment and a single payout, IRR equals the compound annual growth rate. With cash flows in between, IRR weights each flow by when it happens, which a simple average return doesn't.
Related Guides
Cap Rate Calculator: Net Operating Income and Property Value
Work out a rental property's net operating income and capitalization rate from rent, vacancy and operating expenses, and the price that matches a target cap rate
Time Value of Money Calculator: Solve for FV, PV, PMT, N or Rate
Enter four of the five time-value-of-money inputs and solve for the fifth — the monthly saving needed for a goal, the years it takes, the rate it needs, or what it grows to
Rental Cash Flow Calculator: Monthly Profit & Cash-on-Cash
Run a rental deal in 60 seconds, including vacancy, maintenance, and management
Future Value Calculator: Lump Sum, Regular Payments and Inflation
Find what a starting amount plus regular deposits grows to at a rate you choose, with payments at the start or end of each period and the result in today's dollars
eBay Profit Calculator: Fees, Shipping & Net Profit (2026)
Free eBay profit calculator: enter sale price, item cost, shipping and promoted rate to see final value fees, net profit, margin and ROI
Free Short-Term Rental Calculator: Airbnb Monthly Income & Cash Flow
Enter nightly rate, nights booked, cleaning and fixed costs to get monthly Airbnb income and the cash flow left after every cost
Browse the whole site
Build Your Personalized Income Plan
Get an AI-generated plan covering all 20 income types in 60 seconds.