IRR & NPV Calculator – Easy Online Tool

When making investment decisions, two of the most important financial metrics are IRR (Internal Rate of Return) and NPV (Net Present Value). Our free IRR & NPV Calculator helps you quickly measure the profitability of your projects, businesses, or personal investments. By entering your cash flows and discount rate, you can instantly see whether an investment is worth pursuing.

What is IRR?

The Internal Rate of Return (IRR) is the rate at which the Net Present Value (NPV) of future cash flows equals zero. In simple terms, it is the annual growth rate an investment is expected to generate. A higher IRR means a more profitable investment.

Example: If you invest $1,000 and receive $400 each year for 3 years, the IRR calculator will show the return percentage you’re actually earning annually.

What is NPV?

Net Present Value (NPV) measures the difference between the present value of cash inflows and outflows, discounted at a specific rate. A positive NPV means the investment adds value, while a negative NPV suggests a potential loss.

Example: If your project has an NPV calculation of $2,500 at a 10% discount rate, it means your investment is expected to generate $2,500 more than its cost.

How to Use the IRR & NPV Calculator

1. Enter your initial investment (negative cash flow).

2. Add expected cash inflows for each year.

3. Enter a discount rate (%) for NPV calculation.

4. Click Calculate to see both IRR and NPV instantly.

The calculator also allows you to add or remove years, making it flexible for both short-term and long-term projects.

Why IRR & NPV Matter in Business

• IRR helps compare multiple projects and choose the one with the highest return.

• NPV shows whether the project adds real financial value after considering the cost of capital.

• Together, they provide a complete picture for smarter investment decisions.

Example of IRR vs NPV

• Investment: $1,000 (Year 0)

• Returns: $400 (Year 1), $400 (Year 2), $400 (Year 3)

• Discount Rate: 10%

IRR ≈ 23.38%
NPV ≈ $49.21

This means the project is profitable, since IRR is higher than the discount rate and NPV is positive.

Frequently Asked Questions (FAQs)

Q1: How to calculate IRR manually?
IRR is the discount rate that makes NPV equal zero. It usually requires trial-and-error or financial software, but our IRR calculator does it instantly.

Q2: Which is better – IRR or NPV?
Both are useful: IRR is easy to understand as a percentage return, while NPV gives the absolute value created. Smart investors use both before making decisions.

Q3: Can this calculator be used for business projects?
Yes  Whether you’re analyzing a startup, real estate investment, or expansion project, the tool works for all types of cash flows.

Final Thoughts

The IRR & NPV Calculator is a must-have financial tool for businesses, students, and investors. By entering your project cash flows and discount rate, you can easily calculate IRR, compare it with your required return, and check if the NPV is positive.