IRR (Internal Rate of Return)
The discount rate at which a project’s net present value equals zero: the annualized return the project’s cash flows imply.
IRR is found by solving for the rate that makes the present value of a project’s future cash flows equal its initial outlay. There is no algebraic formula, so it is found by search. A project is usually accepted if its IRR exceeds the discount rate or hurdle rate, and rejected if it falls short.
IRR assumes cash flows are reinvested at the IRR itself, which can be unrealistic when IRR is high, and a cash flow that changes sign more than once can have zero, one, or several IRRs, making the metric unreliable in those cases. MIRR fixes both issues with an explicit reinvestment rate.
Calculate your own irr (internal rate of return) instantly, free.
Open the calculator →