Calculate the Internal Rate of Return (IRR) to evaluate the profitability of an investment.
Investment Data
Enter annual returns (e.g., 2000, 3000...)
Performance Metrics
Internal Rate of Return12.83%Positive Return
Initial Cost$10,000
Cash Flow Timeline
About this calculator
Overview
Calculate the Internal Rate of Return (IRR) to evaluate the profitability of an investment.
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Pro Tips
What is IRR?: Internal Rate of Return (IRR) is a financial metric used to estimate the profitability of potential investments. It is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
What is a good IRR?: Generally, the higher a project's IRR, the more desirable it is. A common rule is that a project should be accepted if its IRR is greater than the company's cost of capital.
How does IRR differ from ROI?: ROI (Return on Investment) measures the total growth of an investment from start to finish. IRR takes into account the time value of money and the timing of each cash flow.
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Fun Facts
"IRR is widely used in private equity and venture capital to rank different investment opportunities."
"The IRR formula generally cannot be solved analytically and must be solved using trial-and-error or numerical methods like Newton-Raphson."
"IRR assumes that all interim cash flows are reinvested at the same rate as the IRR itself, which can sometimes be an unrealistic assumption."
