MCPCalc

IRR Calculator

Calculate the internal rate of return for an investment with future cash flows.

Scratchpad (not saved)

$

Upfront cost of the investment

%

Minimum acceptable rate of return

Cash Flows
$
$
$
$
$

What This Calculator Does

Calculate the internal rate of return for an investment with future cash flows.

It combines Initial Investment, Year 1 Cash Flow, Year 2 Cash Flow, Year 3 Cash Flow to estimate Internal Rate of Return (IRR), Exceeds Hurdle Rate?, Hurdle Rate.

Formula & Method

Core equations: IRR is the rate r that satisfies: NPV = \sum_{i=0}^{n} \frac{CF_i}{(1 + r)^i} = 0 The calculator solves this using Newton's method with the derivative: NPV' = \sum_{i=1}^{n} \frac{-i \cdot CF_i}{(1 + r)^{i+1}} Inputs are applied in base units, then derived metrics are computed from the same equations and rounded for display.

Notation used in the formulas: R = Internal Rate of Return (IRR); x_{1} = Initial Investment; x_{2} = Year 1 Cash Flow; x_{3} = Year 2 Cash Flow; x_{4} = Year 3 Cash Flow; x_{5} = Year 4 Cash Flow; x_{6} = Year 5 Cash Flow.

Method summary: inputs are normalized to consistent units, core equations are evaluated, then secondary values are derived and rounded for display.

Use this calculator for quick scenario analysis. Start with baseline values, change one driver at a time, and compare how sensitive the results are to each input shown above.

Inputs Used

  • Initial Investment: Upfront cost of the investment
  • Year 1 Cash Flow: Used directly in the calculation.
  • Year 2 Cash Flow: Used directly in the calculation.
  • Year 3 Cash Flow: Used directly in the calculation.
  • Year 4 Cash Flow: Used directly in the calculation.
  • Year 5 Cash Flow: Used directly in the calculation.
  • Required Return (Hurdle Rate): Minimum acceptable rate of return

Related Calculators