IRR Calculator
Estimate the annual internal rate of return from an initial investment, recurring distributions and exit proceeds.
The annual discount rate that sets equity cash-flow NPV to zero is 14.07%.
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Get the model · €49 incl. VATHow the IRR calculation works
IRR is the annual discount rate that makes the net present value of all equity cash flows equal to zero.
Example calculation
Invest €5.0m, receive €250k at each year-end and €8.0m of net sale proceeds in year five: annual IRR is 14.07%.
How professionals use the result
Use IRR to compare investments with different cash-flow timing. Always read it alongside equity multiple, peak equity, leverage and downside loss.
Common mistakes
- Treating an annual result as a monthly rate
- Ignoring interim capital calls
- Using gross sale value rather than net equity proceeds
- Comparing IRRs with different risk or leverage
IRR Calculator FAQs
What does the IRR calculator measure?
Estimate the annual internal rate of return from an initial investment, recurring distributions and exit proceeds.
What formula does the IRR calculator use?
IRR is the annual discount rate that makes the net present value of all equity cash flows equal to zero.
Is the result suitable for a final investment decision?
Use it as a transparent screening calculation. Validate deal-specific tax, timing, financing and legal assumptions in a complete underwriting model before making a decision.
Do I need an account?
No. The calculator is free and runs in your browser. FormulaPlanet does not store your projects, inputs or results.
Is any input sent publicly?
No calculation is public by default. A shareable link is only created when you explicitly choose to copy one; that link contains the assumptions shown in its URL.
Why might my spreadsheet give a different answer?
Differences usually come from timing, compounding, sign conventions, fees or a different definition of the numerator or denominator. Match every period and definition before comparing.
What should I review alongside this result?
Use IRR to compare investments with different cash-flow timing. Always read it alongside equity multiple, peak equity, leverage and downside loss.
Which mistakes are most common?
Treating an annual result as a monthly rate; Ignoring interim capital calls; Using gross sale value rather than net equity proceeds; Comparing IRRs with different risk or leverage.