How do you calculate IRR?
IRR is the discount rate that makes the net present value of all signed cash flows equal to 0. In practice, it is the rate r that solves Σ(Ci / (1 + r)^i) = 0 when the initial outlay and all later inflows and outflows are included. With non-conventional cash flows, more than one valid IRR can exist, which is why analysts often also review NPV.
What does IRR mean?
IRR shows the implied annualized return of a project based on its cash-flow pattern. It is most useful when compared with a hurdle rate or WACC, and it should be reviewed alongside NPV when project scale or unusual cash flows matter.
What is a good IRR?
A “good” IRR is one that exceeds your required return or hurdle rate. Many analysts compare IRR with WACC or another target return to decide whether a project creates enough value for its risk.
What is the difference between IRR and MIRR?
IRR assumes intermediate cash flows can be reinvested at the IRR itself. MIRR uses a separate finance rate for negative cash flows and a reinvestment rate for positive cash flows, which often makes it more realistic for capital budgeting. MIRR is also useful because non-conventional cash flows can produce multiple IRRs, while MIRR gives a single return based on your chosen finance and reinvestment assumptions.
Can I use monthly or irregular cash flow timing in this IRR calculator?
Yes. You can choose annual, semi-annual, quarterly, or monthly frequency and still enter editable timing values such as 1.5 if your cash flows are not evenly spaced. That makes the tool more flexible than a simple equal-period IRR calculator.
Why compare IRR with a hurdle rate?
The hurdle rate represents the minimum return the project must earn to be acceptable. If IRR is above the hurdle rate, the project may pass the return test; if it is below, it may fail even if cash inflows are positive.
What is the difference between IRR and NPV?
IRR expresses performance as a rate of return, while NPV measures value in money terms. IRR is useful for comparing return thresholds, while NPV shows how much value a project adds at a chosen discount rate. Many analysts use both together rather than relying on only one metric.
When is MIRR more useful than IRR?
MIRR is often more useful when reinvestment assumptions matter, when you want to separate financing cost from reinvestment return, or when conventional IRR could be misleading for non-standard cash-flow patterns. That includes cases where the cash-flow signs change more than once and multiple IRRs may exist.
How do you calculate IRR in Excel?
In Excel, you can use =IRR(values) for equally spaced cash flows. If timing is irregular, analysts often use =XIRR(values, dates). This calculator is designed for irregular timing by letting you edit the timing values directly.
Can IRR be negative?
Yes. A negative IRR means the project is expected to destroy value relative to the invested capital over the modeled time period.
What is the difference between IRR and XIRR?
IRR assumes cash flows are equally spaced, such as annual, quarterly, or monthly periods. XIRR uses actual calendar dates, so it is usually better when cash flows happen at irregular times. This calculator supports irregular timing by letting you edit the timing values directly.
Can I export the IRR calculation to CSV?
Yes. The calculator can export the full setup and result to CSV, including frequency, hurdle rate, finance rate, reinvestment rate, cash-flow rows, totals, IRR, MIRR, spreads, and decision output.
