Irr Calculator
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IRR Calculator
Calculate the internal rate of return for your investment cash flows
Internal Rate of Return (IRR)
Enter one row per year. Use a minus sign for money you put in, and a positive number for money you get back.
How to use this calculator
- Year is the timing of the cash flow. Year 0 is today (when you invest). Year 1 is one year later, Year 2 two years later, and so on.
- Cash flow (₹) is the amount in rupees that year — not a percentage.
- Type a negative value when money leaves you (you invest, pay extra capital, or incur a cost). Example:
-100000means you invested ₹1,00,000. - Type a positive value when money comes back to you (income, dividend, sale, or maturity). Example:
50000means you received ₹50,000. - Keep at least one negative row (the investment) and one or more positive rows (the returns). Then read the estimated annual return and net cash result below.
Initial purchase, SIP top-up, additional property cost, loan you repay (outflow). Always prefix with a minus: -250000
Rent, coupon, maturity value, sale proceeds, salvage. No minus sign: 80000
Worked example (already filled in): Year 0 -1,00,000 is the amount you invest today. Years 1–4 are cash you receive (₹20,000, ₹30,000, ₹40,000, ₹50,000). Total received is ₹1,40,000, so net cash is ₹40,000. The % figure is a simplified annualised return over those years — useful for a first look, not a replacement for a full IRR model.
Calculation Results
This is a simplified annualised estimate from your cash-flow table, not a Newton IRR solver. Use it to understand the idea. For a live investment decision, speak with a financial advisor.
Understanding Internal Rate of Return
Sign convention, a worked example, and when IRR is (and is not) the right tool
What is IRR?
The Internal Rate of Return (IRR) is the annual rate that makes the net present value of all cash flows equal to zero. In plain language: it is the yearly return your project earned, after timing of money in and money out.
Negative vs positive numbers
Finance convention: cash leaving your pocket is negative; cash entering it is positive. The first row is almost always negative (the purchase). Later years can mix both — for example a mid-life renovation (−) and rental income (+). Do not enter the investment as a positive number or the result will be meaningless.
How to interpret the result
A higher IRR is generally more attractive. Compare it with what you could earn elsewhere (for example a debt fund or your required rate). If IRR is above that hurdle, the project looks acceptable on return alone. Always also look at risk, liquidity, and tax.
Limitations of IRR
- Assumes reinvestment at the same rate, which may not be realistic
- May give misleading results for non-conventional cash flows
- Cannot rank mutually exclusive projects properly
- May not exist or may have multiple values for certain cash flow patterns
When to Use IRR
- Evaluating standalone projects
- Comparing projects of similar size and duration
- When cash flow timing is important
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