IRR Calculator
What is an internal rate of return (IRR) calculation?
This IRR calculator calculates an annualized rate-of-return plus profit (loss).
- Supports dated cash flows
- Easy bulk data entry
- Save entries to a file for later recall
- Know your rate of return across multiple accounts and investments
Answers the question: "How am I doing?"
The IRR is an annualized rate-of-return on an investment. It is calculated using only cash flow amounts for inputs and does not depend on an interest rate, thus the term "internal." The calculator uses Newton's method to calculate the IRR.
An Internal Rate of Return Calculator (IRR) is used to calculate an investment's bottom line. You can use the results for bragging rights, or more importantly, to compare two or more different investment options.
This calculator will calculate the IRR for a complicated series of cash flows as well as the total invested, total returned and the profit (or loss). It supports both irregular length periods and exact date data entry.
On the other hand, the frequency option makes it easy to set up regular cash flows such as daily, monthly, or quarterly. (You have eleven from which to pick!)
Make sure that you check out the usage tips below (click to scroll).
Information
- Feb. 13: Change the calculator's layout so that user can add a description to each cash flow. The description is not required.
- Feb. 16: On smaller desktop monitors, the browser should set the calculator, by default, to an easier-to-use size — no change for mobile devices. Users can always adjust the size by clicking the '-' or '+' buttons. Please let me know if you have any difficulties. The sizing improvement will be rolled out to nearly all calculators over the coming weeks.
Why is IRR useful beyond bragging rights?
IRR is a Very Useful Number because it gives the investor the ability to compare investments. That is, the IRR normalizes the results for different cash flows.
Take, for example, two rental properties that are for sale. The offer price for both buildings is about the same. Projected rents are about the same. However, one will have a higher upfront renovation cost while the other has higher property taxes. How does an investor know which purchase represents a better investment?
They can use an IRR calculator to make this determination.
A note of caution. When comparing investments, never make the comparison using internal rates of return calculated with different calculators.
Why is that?
Because two different calculators may calculate the results slightly differently, and neither one of them will necessarily be wrong either. (Consider for a moment that Microsoft Excel has two IRR functions that may calculate different IRRs for the same cash flows.) You don't need to get hung up on this idea. But it is something to be aware of so that you understand how to use the results correctly.
For the record, this calculator calculates the IRR using Newton's method and counting days (some calculators count periods).
If you want to try a calculator that uses another IRR calculation algorithm, look no farther than this site's Annual Percentage Rate (APR) calculator. The APR calculator follows the method specified in the Truth-in-Lending Act for calculating APR (which is an IRR calculation).
Calculator usage and tips
- Zero amounts have no impact on the IRR result. If you set the frequency to "Monthly," and there are only four cash flows in a year, you may leave eight initialized to 0. The same applies to 0 amounts after you've entered the final liquidation value.
- Enter the investment's current or final value as the last cash flow. If you are calculating the IRR for a stock or mutual fund, and you still own the investment, you should enter the investment's value as the last amount.
- You do not need to enter cash flows in date order. The calculator will sort them before calculating the result. This feature is handy, of course, if you realize that you missed entering a cash flow. Enter the amount in any available cell. Then change the date associated with that cell. Click "Calc" to sort.
- If you mistakenly duplicate a cash flow, set one of the duplicates to "0".
- Changing the "First Cash Flow Date" will reset the dates without clearing the values you've entered.
- Depending on the order you use "First Cash Flow Date," "Remove 0's" and "Add Series," the "First Cash Flow Date" may not be the first date in the input area. This is not a bug. Changing "First Cash Flow Date" initializes a series starting on the date selected. However, the user can change the date, or it can be removed with "Remove 0's" if the value for the start date is 0. Finally, a user can insert a series with a date before "First Cash Flow Date."
- Calendar Tip: When using the calendar, click on the month at the top to list the months, then, if needed, click on the year at the top to list years. Click to select a year, select a month, and select a day. Naturally, you can scroll through the months and days too. Or you can click on "Today" to quickly select the current date.
- If you prefer not using a calendar, single click on a date or use the [Tab] key (or [Shift][Tab]) to select a date. Then, as mentioned, type 8 digits only - no need to type the date part separators. Also, because the date is selected, you do not need to clear the prior date before typing. If your selected date format equals mm/dd/yyyy, then for Dec. 1, 2024, type 12012024.
- And don't stress out: you do not need to enter the cash flows in date order. You have a computer. It and this calculator are smart enough to sort the cash flows for you once you've clicked the "Calc" button.
And now to repeat an essential word about IRR calculators.
Different IRR calculators may use different algorithms for finding the rate-of-return. (There is no equation or formula for calculating IRR.) Therefore, don't compare the results from one IRR calculator for one investment with results from another calculator for a different investment. Always use the same calculator to compare different investments.
IRR is the annualized return on an investment expressed as a percentage.
The investment can be made up of a series of cash flows. That is, there can be more than one investment or one withdrawal. (However, there has to be at least one or each.) The cash flows may occur on any date and for any amount.
It is essential to use the right sign (positive or negative) for each cash flow. How do you know what the correct sign is?
Think of it this way. When you first invest, you have to write a check or transfer funds. Writing a check decreases your account balance. Therefore, enter all investment cash flows, including the "Initial Investment" as negative values.
When you earn money back on your investment, you can deposit it into your checking account. The return increases your account balance. Therefore, enter all investment returns, including the final liquidation value of your investment, as positive values.
The scheduled dates update every time you change the "Cash Flow Frequency." The new dates are calculated based on the "First Cash Flow Date." But the "Cash Flow Frequency" has no direct impact on the IRR result per se. The calculator only uses the "Cash Flow Frequency" setting to create dates that most closely match your investment cash flows. If, in general, you only make additional investments (or withdrawals) twice a year, then set "Cash Flow Frequency" to "Semiannually" for example.
Wyatt1905 says:
Is there an issue with the IRR calc? Every time I enter in my cash flow schedule and then click the calc button everything gets zeroed out.
Karl says:
No, I don’t believe there is any problem. However, I just rolled out some small changes to the site that might have caused a momentary problem at about the time you posted your question.
Please try again. But first, before entering data, do a refresh of the page, per below (to assure you have the latest update).
Please let me know if you still have a problem. I would test by making 2 or 3 cash flow entries before taking the time to make a lot of entries.
If you do not see the change right away, you may have to perform a hard refresh of the page:
Depending on your operating system all you need to do is the following key combination:
Above, from Refresh Your Cache.
Tim Kretz says:
Thank you for the quick reply. I did the cache clear and also went into my Chrome settings and cleared the cache and I keep having the same 2 issues. It either zeroes out my input if I don’t change any dates. But even weirder when I change the dates back to 2010 for the investment date and the first payment it just grays out the entire screen after I hit continue. I tried a reboot as well.
Karl says:
That does not sound good.
Thanks for mentioning that you have the issue after changing the first cash flow date. I can duplicate the problem. The background from the message box that asks if you want to continue is not getting cleared away and it’s blocking access to the calculator.
I can’t duplicate (yet) the clearing of the inputs when you do not change the date. Can you save your inputs to a file (before clicking calc of course) and send me the file? The email address is on the contact page.
I’ll look at these problems this after noon and I’ll keep you posted.
Thanks for letting me know.
Tim Kretz says:
The issue I have is that I cannot even do a file save because once I load my inputs and change the dates once that message box pops up and I click continue it grays out the screen and I have to go back or refresh.
Karl says:
I had understood that if you DON’T change dates the inputs would clear when you click calculate. Am I wrong?
If that’s the case, if you can click calculate, then you should be able to click on file save.
Karl says:
I see what the problem was, AND IT IS NOW FIXED. If a user had changed the "First Cash Flow Date" by typing, the calculator would become unresponsive. (Changing the date using the calendar always had worked.)
I guess I had always tested the calculator using the calendar. The key to me seeing the problem was when you mentioned that you set the year to 2010. It wasn’t until then that I tried changing the date by typing. 🙁
Spencer A says:
I am also having issues with the IRR calculator:
When entering 5 or more cashflow series it zeroes out all the numbers in the calculations fields and I have to go back and reenter all the data again.
If I get to 5 cashflow series added, it does it again. I changed the “first cashflow date” to a date prior to when my first cashflow started and it still happens.
I am able to enter multiple single cashflows with 1 month entry ( as in a down payment, or 1 time event). But the entry of multiple “amortization schedules” keep zeroing the table.
I had some of the “am schedules” that started on the same dates and figured that may be causing the issue, but when I changed them and added 5 cashflow series it zeroes out again.
Karl says:
Sorry you are having a problem. However, unfortunately I’m not following you.
Are you saying that you use the "Add series" button and you can add a series 4 times, but when you add a 5th series, the prior entries are zeroed out?
I just tested, and I was able to add 5 series without a problem. I added 12 periods, 5 times with each being for a different amount but the same dates and nothing was wiped out.
If you could document the steps you are taking and when you have the problem, I’m happy to take a look (and fix any problems). But if I can’t duplicate the problem, I can’t fix it.
Karl says:
Additionally, what did you mean by "I’m also having issues"? Did you have other problems when trying another calculator?
Karl says:
Thank you for providing an example, Spencer. I’m able to duplicate the problem. I have to diagnose why the values are zeroed out though. I see a message that the date calculation is trying to insert a ‘bad year’.
I will let you know when this is fixed – hopefully, before the weekend.
Jon says:
Karl I’m a land investor and have been using your product forever. It’s my go to and I love it, I use it in my training courses and mention it every time I give a talk. I’m trying to run more advanced and lengthy cash flow reports. My way of doing this is to add a series to months and “stack them” so to speak. Is there a max number of entries you can have per month? I am seeing once you put 17 entries in a single month that it glitches and goes to 0?
Karl says:
Hi Jon, I am happy to hear that you have found the calculator useful over the years (and that you recommend it)!
There certainly is no intentional maximum entries per month. There might be an overall maximum number of entries of 999, but I would need to refresh my memory by digging into the code.
In either event, nothing a user does should cause the values to reset to 0. The problem is, I can’t duplicate the problem which I need to be able to do to fix it. My guess is, it probably does not have anything to do with the number of entries but rather with a sequence of steps. For example, I just added values to about 20 inputs, all the first of the month. Then I added a daily series of $100 for 20 days starting on September 1 and it worked fine.
Are you repeatedly adding series? If so, are you doing it for a particular number of entries, or are you adding series until a particular end date?
Perhaps the problem happens after a particular number of new series have been added?
Do your dates go beyond 2099?
I would like to fix this. Any clues you can give me would be helpful.