Finance CalculatorsBusiness FinanceFree Tool
IRR Calculator
Calculate the Internal Rate of Return for an investment with an initial outlay and four yearly cash flows, using an iterative bisection method.
How to Use IRR Calculator
- 1Enter your initial investment amount
- 2Enter your Year 1 through Year 4 cash flows
- 3Click Calculate to see the IRR percentage and accept/reject guidance
Frequently Asked Questions
Exactly four - this calculator is fixed to an initial investment plus four yearly cash flows (Year 1 through Year 4). If you need more flexibility in the number of cash flow periods, use the NPV Calculator instead.
The calculator searches for the discount rate that makes NPV equal to zero using a bisection method (200 iterations across a -50% to 500% range) rather than a closed-form formula - this is how IRR is solved in practice since there's no direct algebraic solution for most cash flow patterns.
Compare it to your hurdle rate or cost of capital - the calculator flags that you should accept the investment if IRR exceeds that rate, and reject it if IRR is below.
Yes, in general IRR can have multiple solutions or none at all when cash flows change sign more than once. For four straightforward cash flows following an initial outlay, the bisection search here will find a single sensible root in the vast majority of cases.
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