What is Internal Rate of Return (IRR)?
IRR is the discount rate at which the Net Present Value (NPV) of a project or investment becomes zero. It is used to estimate the profitability of potential investments.
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Free IRR Calculator | 1ClickTools
Calculate the Internal Rate of Return (IRR) and Net Present Value (NPV) for any series of cash flows. Free online financial analytics.
Frequently Asked Questions
Can IRR be negative?
Yes, if the total cash inflows are less than the initial investment outlay, the IRR will be negative, indicating a financial loss.
What is the difference between IRR and NPV?
NPV calculates the net dollar value of cash flows discounted to today's value, while IRR is the rate of return that makes the NPV equal to zero. NPV is a currency figure, whereas IRR is a percentage.
What does it mean if the IRR is higher than the discount rate?
If the IRR of a project is greater than the discount rate (cost of capital), the project is generally considered financially viable as it generates more returns than the cost to fund it.
How does the bisection/Newton method work in this calculator?
It iteratively guesses discount rates until it finds the one that makes the sum of discounted cash flows equal to the initial outlay (NPV = 0).
How accurate is this irr calculator tool?
All processing runs entirely in your browser using verified algorithms. Results are computed with full double-precision — no server-side rounding or data transmission occurs.