IRR Calculator

What internal rate of return means

Internal rate of return is the discount rate that makes the net present value of a series of cash flows equal zero. It converts an uneven stream of costs and benefits into one annualised percentage, which makes it easy to compare projects of different shapes and durations. This calculator solves for IRR numerically, spreading each year's cash flow evenly across its twelve months, the same convention used inside BizCase Builder.

How to read the results

• IRR above your hurdle rate — the project earns more than your cost of capital, so it creates value.
• Positive NPV — the discounted benefits exceed the investment in today's money. NPV is the more reliable tie-breaker when two projects differ greatly in size.
• Payback period — how long until cumulative cash flow turns positive. It ignores the time value of money, so use it alongside NPV rather than on its own.
• No IRR shown — a stream that never turns positive, or one with several sign changes, may have no single valid IRR. Judge those cases on NPV.

IRR vs NPV vs ROI

ROI is a simple ratio of net gain to cost and ignores timing entirely. NPV respects timing but reports a currency amount that depends on the discount rate you pick. IRR respects timing and is rate-independent, which is why investment committees usually ask for all three. BizCase Builder models them together, with best and worst case scenarios, phased capital spend and side-by-side version comparison.