Enter Initial cash flow ($), Year 1 cash flow ($) and Year 2 cash flow ($) and the remaining scenario settings to review internal rate of return with this tool. IRR summarizes the timing pattern of the listed cash flows.
IRR is the discount rate r where: 0 = Σ [Cash flow at time t ÷ (1 + r)^t]The calculation links Initial cash flow ($), Year 1 cash flow ($) and Year 2 cash flow ($) to internal rate of return. IRR summarizes the timing pattern of the listed cash flows. It is distinct from simply dividing total profit by the initial investment.
Enter Initial cash flow ($), Year 1 cash flow ($) and Year 2 cash flow ($) and the remaining scenario settings to review internal rate of return with this tool. IRR summarizes the timing pattern of the listed cash flows.
Find a discount rate that makes the net present value of entered periodic cash flows zero. Use negative entries for money invested and positive entries for money received.
IRR summarizes the timing pattern of the listed cash flows. It is distinct from simply dividing total profit by the initial investment.
Prepare Initial cash flow ($), Year 1 cash flow ($), Year 2 cash flow ($), Year 3 cash flow ($), Year 4 cash flow ($), Year 5 cash flow ($) and Guess rate (%). Order cash flows chronologically, preserve the initial outflow sign and use equal time periods for this periodic model.
IRR summarizes the timing pattern of the listed cash flows. It is distinct from simply dividing total profit by the initial investment. Irregular dates require a dated cash-flow method. Multiple sign changes can create multiple roots, and some cash-flow streams have no meaningful IRR.
Use the full settings in the worked-example table. They produce Internal Rate of Return: 15.24%. Compare the method and units as well as the displayed number.
The displayed relationship is IRR is the discount rate r where: 0 = Σ [Cash flow at time t ÷ (1 + r)^t] Order cash flows chronologically, preserve the initial outflow sign and use equal time periods for this periodic model.
Irregular dates require a dated cash-flow method. Multiple sign changes can create multiple roots, and some cash-flow streams have no meaningful IRR. Check the original measurement, source data and the convention required by the task.
Worked irr calculator example. Set Initial cash flow ($) = -10000; Year 1 cash flow ($) = 3000; Year 2 cash flow ($) = 3000; Year 3 cash flow ($) = 3000; Year 4 cash flow ($) = 3000; Year 5 cash flow ($) = 3000; Guess rate (%) = 10. The corresponding output is Internal Rate of Return: 15.24%. IRR summarizes the timing pattern of the listed cash flows.
Find a discount rate that makes the net present value of entered periodic cash flows zero. Use negative entries for money invested and positive entries for money received.
Order cash flows chronologically, preserve the initial outflow sign and use equal time periods for this periodic model.
| Field | Example value | Entry check |
|---|---|---|
| Initial cash flow ($) | -10000 | Use the amount for this scenario in the currency and period shown by the field. |
| Year 1 cash flow ($) | 3000 | Use the amount for this scenario in the currency and period shown by the field. |
| Year 2 cash flow ($) | 3000 | Use the amount for this scenario in the currency and period shown by the field. |
| Year 3 cash flow ($) | 3000 | Use the amount for this scenario in the currency and period shown by the field. |
| Year 4 cash flow ($) | 3000 | Use the amount for this scenario in the currency and period shown by the field. |
| Year 5 cash flow ($) | 3000 | Use the amount for this scenario in the currency and period shown by the field. |
| Guess rate (%) | 10 | Enter a percentage in the form requested by the field, keeping its stated time basis. |
Relationship used for this example: IRR is the discount rate r where: 0 = Σ [Cash flow at time t ÷ (1 + r)^t]
IRR summarizes the timing pattern of the listed cash flows. It is distinct from simply dividing total profit by the initial investment.
| Output | Displayed result |
|---|---|
| Internal Rate of Return | 15.24% |
With these settings, internal rate of return is 15.24%. Use the same units and calculation mode when reproducing this example.
IRR summarizes the timing pattern of the listed cash flows. It is distinct from simply dividing total profit by the initial investment. Irregular dates require a dated cash-flow method. Multiple sign changes can create multiple roots, and some cash-flow streams have no meaningful IRR.
Replace the illustrative initial cash flow ($) value (-10000) with your own value, then complete the other inputs for the same scenario. Order cash flows chronologically, preserve the initial outflow sign and use equal time periods for this periodic model.