IRR Calculator Estimate annualized return on uneven cash flows — with NPV curves, real benchmarks, and error-safe math. ...
IRR Calculator
Estimate annualized return on uneven cash flows — with NPV curves, real benchmarks, and error-safe math.
IRR Formula**:
$$ \sum_{t=0}^{n} \frac{C_t}{(1+IRR)^t} = 0 $$
Where $C_t$ = cash flow at time $t$ (negative = outflow).
Example** (Startup investment): • Year 0: −$100,000 • Year 3: +$50,000 • Year 5: +$200,000 → **IRR = 18.3%**
✅ Pro Tip**: IRR is the discount rate that makes NPV = 0. Use it to compare projects of different sizes/timing.
⚠️ Avoid these pitfalls:
- Multiple IRRs** — Cash flows change sign >1 time → multiple solutions (e.g., −$10K, +$25K, −$15K)
- No IRR** — All cash inflows → no solution
- Scale blindness** — 100% IRR on $1 vs. 15% on $1M → prefer the latter
- Reinvestment assumption** — IRR assumes cash is reinvested at IRR rate (often unrealistic)
✅ When to Use Alternatives**:
- Use MIRR if finance/reinvest rates differ
- Use NPV for mutually exclusive projects
- Use XIRR for irregular timing (real-world deals)
| Investment | Typical IRR | Example Cash Flows |
|---|---|---|
| Real Estate Syndication | 12–20% | −$500K, $40K × 5, +$650K |
| Angel Startup | 25–50% | −$100K, $0×2, $50K, $200K |
| VC Fund | 20–30% | −$1M, $200K×5 exits |
| S&P 500 (10-yr) | 9.8% | −$10K, +$24.5K in 10 yrs |
📉 Red Flag IRRs**:
- <10% for venture/private equity → likely underperforming
- >100% → unsustainable or tiny base (e.g., $10 → $120)
➡️ Standard IRR
Enter annual cash flows: “−$100K, $0, $0, $50K, $0, $200K” → IRR = 18.3%
➡️ XIRR
Use dates for accuracy: Jan 1 2025: −$100K; Jan 1 2028: $250K → XIRR = 35.7%
➡️ MIRR
Model realistic rates: 8% finance, 6.5% reinvest → MIRR = 16.2% (vs. IRR 18.3%)
Note: Uses Newton-Raphson + bisection fallback. Handles up to 20 cash flows. Dates in XIRR use actual/365 day count.