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TallyBench / IRR Calculator
// IRR CALCULATOR

What annualized rate of return does this cash flow stream deliver?

Enter your initial investment and up to 5 yearly cash flows — this solves for the internal rate of return that makes their net present value exactly zero.

Estimate only. Assumes cash flows land at the end of each year and searches for a single real-valued IRR — some unusual cash flow patterns can have more than one mathematically valid IRR or none at all.
IRR (Annualized)0%
Total Cash Flows Returned$0
Net Profit$0

What is IRR and how is it used?

IRR (Internal Rate of Return) is the discount rate at which the net present value of a series of cash flows equals zero. In plain terms, it's the annualized rate of return an investment actually delivers, given its upfront cost and the cash it pays back over time. Investors and businesses use it to compare projects with very different cash flow patterns on one comparable percentage figure.

IRR vs. simple ROI — what's the difference?

Simple ROI compares total gain to total cost without regard to when the cash actually arrived, so it can't distinguish between getting your money back in year 1 versus year 5. IRR is time-aware — it explicitly accounts for the timing of each cash flow, so two investments with identical total ROI can post very different IRRs if their cash arrives on different schedules. See the ROI Calculator for the simpler, non-time-weighted comparison.

What does it mean if IRR can't be found?

IRR requires the cash flow stream's net present value to cross from positive to negative somewhere within the search range. If all your cash flows are positive (or all negative), or the total returned never comes close to covering the initial investment even at very high discount rates, there may be no rate that solves the equation — this tool shows "—" with a note in that case rather than an incorrect number.

Is a higher IRR always better?

Not necessarily. IRR can mislead when comparing projects of very different scale or duration — a tiny, fast-payback investment can post an eye-catching IRR while returning far fewer total dollars than a larger, longer project with a lower IRR. Always weigh IRR alongside the total dollar profit and investment size — see the Payback Period Calculator for how quickly a project recovers its cost, a useful companion metric.

Worked example: a $10,000 initial investment returning $3,000, $4,000, $4,000, $3,000, and $2,000 over the following 5 years. Total cash flows returned = $16,000, so net profit = 16,000 − 10,000 = $6,000. Solving for the rate that makes the net present value of that stream exactly zero gives an IRR of approximately 19.25%.