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Internal Rate of Run (IRR) Calculator

Enter the initial investment and up to three yearly cash inflows to compute the Internal Rate of Return.

Internal Rate of Return (IRR) Calculator

When it comes to making smart investment decisions, one of the most powerful tools investors rely on is the Internal Rate of Return (IRR). The IRR measures the profitability of an investment by calculating the discount rate at which the Net Present Value (NPV) of future cash inflows equals the initial investment outflow. In simpler terms, it tells you the rate of return your investment is expected to generate.

Our Internal Rate of Return (IRR) Calculator makes this process simple. By entering your initial investment and projected cash inflows for up to three years, the calculator instantly computes the IRR. This tool is invaluable for investors, business owners, project managers, analysts, and students who want a quick and accurate way to measure investment performance.

What is IRR?

The Internal Rate of Return (IRR) is a financial metric used to determine the profitability of an investment or project. It represents the percentage rate of return where the present value of future cash inflows equals the initial cost.
If IRR > required rate of return → the investment is attractive.
If IRR = required rate of return → the investment breaks even.
If IRR < required rate of return → the investment may not be worthwhile.

0 = NPV = Σt=1n ( Ct / (1 + r)t ) − C0

Example Calculations with IRR

Example 1

Initial Investment: $5,400

Year 1 Cash Inflow: $5,500

Year 2 Cash Inflow: $7,644

Year 3 Cash Inflow: $10,000

0 = −5400 + 5500⁄(1+r)1 + 7644⁄(1+r)2 + 10000⁄(1+r)3 = 110.728499

✅ Result: IRR ≈ 110.73%

Example 2

Initial Investment: $50,000

Year 1 Return: $18,000

Year 2 Return: $20,000

Year 3 Return: $25,000

0 = −50,000 + 18,000⁄(1+r)1 + 20,000⁄(1+r)2 + 25,000⁄(1+r)3 = 11.790474

✅ Result: IRR ≈ 11.79%

Example 3

Initial Investment: $100,000

Year 1 Cash Inflow: $25,000

Year 2 Cash Inflow: $35,000

Year 3 Cash Inflow: $50,000

0 = −100,000 + 25,000⁄(1+r)1 + 35,000⁄(1+r)1 + 50,000⁄(1+r)1 = 4.399617

✅ Result: IRR ≈ 4.40%

Why Use Our IRR Calculator?

✔ Instant Calculations – No need for complex spreadsheets.
✔ Accurate Results – Based on precise financial formulas.
✔ Time-Saving – Computes IRR in seconds.
✔ User-Friendly Design – Clean and simple interface.
✔ Free to Use – Accessible anytime, anywhere.

This calculator helps you:
• Compare multiple investment opportunities.
• Assess the long-term profitability of projects.
• Decide whether to accept or reject an investment.
• Learn how IRR works with real-world financial examples.

Who Should Use the IRR Calculator?

Investors & Venture Capitalists – To compare potential investments.
Business Owners – To evaluate new projects or expansions.
Real Estate Investors – To measure property profitability.
Project Managers – To decide on long-term capital budgeting projects.
Students & Educators – To understand financial modeling in practice.

✅ Final Thoughts
The Internal Rate of Return (IRR) Calculator is a must-have tool for evaluating the true profitability of any investment. By simplifying complex financial formulas, it empowers you to make informed decisions with confidence. Whether you are considering a new business venture, real estate project, or capital investment, this calculator gives you a clear picture of potential returns.

👉 Try our IRR Calculator today on Hive Calculator and discover whether your investments are truly worth it!