Business & investing
IRR Calculator
IRR is the yearly return a project earns on the money tied up in it. If it's higher than your cost of capital or the return you could get elsewhere, the project is worth a look.
Your result will appear here.
How it's calculated
There's no direct formula for IRR. The calculator searches for the discount rate at which the present value of the cash flows exactly equals the initial investment, so the NPV is zero.
Cash flows that switch between positive and negative more than once can have more than one IRR. In that case, NPV at your own required rate is the safer measure.
0 = −Investment + Σ CFₜ ÷ (1 + IRR)ᵗ
How to do it in Excel
=IRR(B1:B6)- Put the initial investment in B1 as a negative number and the cash flows below it.
=XIRR(B1:B6, A1:A6)- Use XIRR when the cash flows arrive on irregular dates listed in column A.