Skip to content
SumHub
Log in

IRR calculator

Work out the return (IRR) and today's value (NPV) of money you put in and get back over time.

Your numbers

Money paid out before anything comes back

Money in or out each period

A period can be a year or a month, as long as they are all the same length

Period 1

Use a minus sign for money going out

Period 2

Use a minus sign for money going out

Period 3

Use a minus sign for money going out

Period 4

Use a minus sign for money going out

Per period. Used to work out what later money is worth today (NPV).

Results

Internal rate of return

15.1%

Per period

This is the average return per period your money earns, based on what you put in at the start and the 4 amounts that follow.

How we calculated this

Value added in today's money
$1,798.46Net present value (NPV), with later money valued at 8% per period
Money in minus money out
$4,500.00All amounts added up, without adjusting for when they arrive

Money in and out by period

Saving and PDF download use a free account. Everything else works without one.

How it works

The internal rate of return (IRR) is the rate per period at which the money coming back exactly pays for the money going in, once every amount is valued in today's money. In other words, it is the rate that makes the net present value (NPV) zero. We find it by narrowing in on that rate step by step, and we also show the NPV at the return you want.

Formula

  • NPV = −amount invested + A1 ÷ (1 + r)^1 + A2 ÷ (1 + r)^2 + … + An ÷ (1 + r)^n
  • At = the amount in period t
  • IRR = the rate r that makes NPV = 0
  • Amount in today's money in period t = At ÷ (1 + return you want)^t

Frequently asked questions

What does IRR tell me?

It is the average return per period that the investment earns on the money still tied up in it. If the IRR is higher than the return you need, the project clears your bar. It lets you compare projects of different sizes on one percentage.

How is IRR different from NPV?

NPV is an amount of money: how much value the project adds after discounting at your chosen rate. IRR is a rate: the discount rate at which that value would be zero. When the two disagree on which of two projects is better, NPV is usually the safer guide because it measures the size of the gain.

Why is there sometimes no IRR, or more than one?

If money never comes back, no rate can balance the money in and out, so there is no IRR. If the amounts switch between money in and money out several times, more than one rate can make the NPV zero. In that case we show the one closest to 0% and suggest checking the NPV too.

Are the periods years or months?

They can be either, as long as every amount covers the same length of time. The IRR is per period, so with monthly amounts you get a monthly rate. To turn a monthly rate into a yearly one, use (1 + monthly rate)^12 − 1.

Related calculators

Results are estimates only, not financial advice. Read the disclaimer.