IRR Calculator guide
IRR Calculator: Internal Rate of Return and NPV
Use our IRR calculator to work out the internal rate of return and net present value of a project or investment from its cash flows.
By the AllCalculator editorial teamUpdated 16 October 20261 min read
The internal rate of return (IRR) and net present value (NPV) are standard ways to judge whether an investment is worthwhile. Our IRR Calculator works out both.
How to use the calculator (IRR Calculator)
- Enter the cash flows by year, starting with the initial investment as a negative number.
- Enter a discount rate for the NPV, such as your cost of borrowing.
How it works
- NPV adds up every cash flow discounted back to today: NPV = Σ CFₜ ÷ (1 + r)ᵗ
- IRR is the discount rate that makes the NPV exactly zero.
A worked example
With the calculator's default settings, investing £50,000 and receiving £12,000, £15,000, £18,000, £20,000 and £10,000 over five years:
- IRR: 15.0%
- NPV at 8%: £9,767
How to use the results
- If the NPV is positive, the project earns more than your discount rate.
- If the IRR is above your cost of capital, it's worth considering.
Frequently asked questions
Can there be more than one IRR?
Yes, if cash flows switch between positive and negative more than once. Then NPV is more reliable.
How is this different from ROI?
IRR accounts for when the money arrives; ROI doesn't. See our ROI Calculator.
Sources and further reading
Links open official and independent websites in a new tab.
This guide is general information to help you understand your options. It isn't financial, tax, legal or building advice and doesn't take your personal circumstances into account. Figures were checked when the guide was last updated and can change, so confirm anything important with GOV.UK, HMRC, a regulated adviser or a qualified tradesperson.