IRR Calculator
Compute the Internal Rate of Return for your investments. Analyze complex cash flows to determine true profitability.
One Lakh Rupees
Internal Rate of Return (IRR)
1345.31%
Cash Flow Analysis
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IRR Deep Dive
What an IRR calculator measures
Internal Rate of Return is the discount rate that makes the net present value of a series of payments and receipts equal to zero. This calculator uses annual rows, so its result is an annual rate for the cash flows entered.
Amounts may differ from year to year. The intervals must remain equal: Year 1 is one year after Year 0, Year 2 is two years after it, and so on. IRR and XIRR use different timing conventions. [1][2]
A worked annual cash flow example
| Year | Net cash flow |
|---|---|
| 0 | −₹1,00,000 |
| 1 | ₹20,000 |
| 2 | ₹25,000 |
| 3 | ₹30,000 |
| 4 | ₹35,000 |
| 5 | ₹40,000 |
These cash flows have an annual IRR of 13.45%. Total receipts are ₹1,50,000, so the undiscounted gain is ₹50,000. That gain is a total amount; IRR also accounts for when each receipt arrives.
How to interpret the percentage
At 13.45%, the discounted receipts in this example approximately equal the initial payment. The percentage does not mean that the investment balance grew by that amount every year.
An IRR based on projected receipts is only as reliable as those projections. Compare the result with an appropriate benchmark, the amount of money involved and the risks attached to receiving the cash flows.
How to Use the IRR Calculator
Enter the initial payment as a positive amount in Initial Investment Outflow. The analysis table should show it as a negative Year 0 cash flow.
Enter the receipt for each later year. Use the net year-end amount when that row represents combined cash movements.
Keep a zero entry for any year with no payment or receipt. Removing the row brings later receipts forward and changes the timing.
Include sale proceeds or a remaining investment valuation in the final year once, together with any other final-year receipt.
Check the cash flow analysis table before reading the percentage or downloading a report.
If you need additional payments after Year 0, the cash flow field must accept negative values. Do not replace an outflow with a positive number to fit an input restriction.
How IRR Is Calculated
The calculator solves for r in this equation:
CF₀ is the initial negative cash flow and later CF values are the net annual receipts or payments. The rate is found numerically because ordinary cash-flow sequences usually do not have a convenient direct formula.
For a quick check, a payment of ₹1,00,000 followed one year later by ₹1,10,000 has a 10% IRR. Keeping the intervening zero year in −₹1,00,000, ₹0, ₹1,21,000 also gives 10% annually.
Choosing the Right Return Measure
IRR and XIRR
IRR uses equal intervals. XIRR uses actual dates and is the appropriate method when payments fall on irregular calendar dates, including an actual SIP history. This FFC calculator has annual rows and does not calculate XIRR.
IRR and CAGR
The CAGR Calculator uses a beginning value, ending value and duration without intermediate external cash flows. For a single initial payment and one final receipt, annual IRR and CAGR agree when the duration is treated consistently.
IRR and ROI
The ROI Calculator describes total return relative to cost. IRR incorporates timing. Neither percentage alone shows the absolute value created, liquidity or risk. Use the Investment Calculator when the task is to project a future balance from an assumed rate.
Advanced limits
Cash flows that change sign several times can have multiple IRRs or no usable solution. A higher IRR can also accompany a smaller rupee gain. For complex project comparisons, net present value at a chosen discount rate may provide more useful context.
The IRR equation does not model how interim receipts are reinvested. A separate terminal-wealth or modified-IRR analysis needs additional assumptions. These advanced measures are outside this calculator's annual IRR result.
Frequently Asked Questions
Can annual cash flow amounts vary?
Can IRR be negative?
What if all cash flows have the same sign?
Can I enter monthly transactions as years?
Are tax and fees included?
Assumptions and Disclaimer
The calculation uses one cash flow per year and does not model transaction dates, market volatility or the certainty of projected receipts. Numerical solvers can fail or find only one solution in unusual cases.
This is education, not investment advice. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Past performance does not guarantee future results.
Sources and Review
Content reviewed on 26 October 2026.