Calculate Internal Rate of Return (IRR) and Net Present Value (NPV) for investment analysis. Enter cash flows to evaluate project profitability.
IRR
19.71%
Internal Rate of Return
NPV
$29,079
at 10% discount rate
| Period | Cash Flow | Cumulative | Present Value |
|---|---|---|---|
| Initial | -$100,000 | -$100,000 | -$100,000 |
| Year 1 | $25,000 | -$75,000 | $22,727 |
| Year 2 | $30,000 | -$45,000 | $24,793 |
| Year 3 | $35,000 | -$10,000 | $26,296 |
| Year 4 | $40,000 | $30,000 | $27,321 |
| Year 5 | $45,000 | $75,000 | $27,941 |
✓ Investment is Attractive
IRR (19.71%) exceeds your required return (10%). The investment creates value.
IRR vs Market Benchmarks
Value Created
$29,079
Net Present Value at 10% discount
IRR
19.71%
Internal Rate of Return
NPV
$29,079
at 10% discount rate
See how your hurdle rate affects investment attractiveness
3 insights based on your inputs
IRR of 19.7% exceeds your 10% hurdle rate. This project should be accepted—it generates returns above your cost of capital.
19.7% IRR significantly outperforms typical investments. Verify assumptions—this may indicate higher risk.
IRR assumes reinvestment at the IRR rate. For more accurate analysis, consider Modified IRR (MIRR) or use NPV as the primary decision metric.
Explore other tools that might help
IRR (Internal Rate of Return) is the discount rate that makes the net present value (NPV) of all cash flows equal to zero. It represents the annualized rate of return for investments with irregular cash flows. Enter your initial investment and expected cash flows at practicalwebtools.com to calculate IRR instantly.
IRR is the discount rate that makes the NPV of all cash flows equal to zero. It represents the annualized effective compound return rate of an investment. Higher IRR = better investment. IRR above your required return rate indicates a good investment.
ROI measures total return as a percentage of investment but ignores timing. IRR accounts for when cash flows occur (time value of money). A project returning $100k over 3 years has different IRR than one returning $100k over 10 years, even with same ROI.
Good IRR depends on context. Generally: >15% is excellent, 10-15% is good, 5-10% is acceptable. Compare to alternatives: stock market averages ~10%, bonds ~4-5%, savings ~4%. Factor in risk - riskier investments should have higher required IRR.
IRR assumes cash flows are reinvested at the IRR rate (often unrealistic). Multiple IRRs can exist with non-conventional cash flows. IRR ignores project size - a small project with 50% IRR may be worse than a large one with 20% IRR. Use with NPV for full picture.
NPV is the total value created in today's dollars. Positive NPV = investment adds value. Use discount rate equal to your cost of capital or required return. If IRR > discount rate, NPV will be positive. NPV tells you how much value; IRR tells you the rate.
IRR
19.71%
Internal Rate of Return
NPV
$29,079
at 10% discount rate