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Click on the calculator's "Help" button for usage details. __It is VERY important that you understand about dates and cash flows.__.

In technical terms, IRR is the discount rate that sets all cash inflows and outflows to 0. More weight is given to the earlier cash flows than to the later cash flows because of the time value of money.

This calculator supports irregular length periods and exact date data entry for the cash flows.

Updated Dec. 1 - it turns out this calculator was not working as intended with respect to setting up the cash flow dates. The point of the "Cash Flow Frequency" setting is to give the user a way to initialize the dates in the input area to be as close as possible to those of the investment being annualized. (The selection of frequency of cash flow itself has no impact on the calculated result.) Prior to today, changing the frequency did not change the dates. That changed today. The dates are now setup based on the "Initial Investment Date" after a change in the "Cash Flow Frequency". Also, it is worth pointing out that clicking on "Clear" will also setup the dates and it will clear the inputs as well while changing the cash flow frequency will not clear the inputs. Help goes into a bit more detail.

Calendar Tip: When using the calendar, click on the month at the top to list the months, then, if needed, click on the year at the top to list years. Click to select a year, select a month and select a day. Naturally you can scroll through the months and days too. Or you can click on "Today" to quickly select the current date.

If you prefer not using a calendar, single click on a date or use the [Tab] key (or [Shift][Tab]) to select a date. Then, as mentioned, type 8 digits only - no need to type the date part separators. Also, because the date is selected, you do not need to clear the prior date before typing. If mm/dd/yyyy is selected for the date format, for Dec. 1, 2016, type 12012016.

And one more time: you do **not** need to enter the cash flows in date order. You have a computer. It and this calculator are smart enough to sort the cash flows for you once you've clicked the "Calc" button. :-)

IRR is the annualized return on investment expressed as a percentage. The investment can be made up of a series of cash flows. That is, there can be more than one investment or one withdrawal. (However, there has to be at least one or each.) The cash flows may occur on any date and for any amount.

It is important to use the right sign (positive or negative) for each cash flow. How do you know what the right sign is? Think of it this way. When you first make an investment, you have to write a check. Writing a check decreases your checking account balance. Therefore, all investment cash flows, including the "Initial Investment" are entered as negative values

When you receive cash back on your investment, you can make a deposit into your checking account. This increases your checking account balance so all returns on your investment, including the final liquidation value of your investment, are entered as positive values.

Every time you change the "Cash Flow Frequency", the dates for the cash flows will be calculated from the "Initial Investment Date". The "Cash Flow Frequency" has no direct impact on the calculated IRR per se. You use this setting to have the calculator create dates for you that most closely match your investment cash flows. If, in general, you only make additional investments (or withdrawals) twice a year, then set "Cash Flow Frequency" to "Semiannually" for example.

If you have the frequency set to say "Monthly", but there are only 4 cash flows in a given year, you can leave 2 cash flows set to 0. Zero amount cash flows have no impact on the calculated IRR. (This is true for 0 cash flow amounts after you've entered the final liquidation value as well.

It is NOT necessary to enter your cash flows in date order. The calculator will sort them prior to calculating the result. This of course is handy if you realize that you missed entering a cash flow. Enter the amount in any available cell, change the date associated with the cell and it will be sorted after you click "Calc".

If you mistakenly duplicate a cash flow, just set one of the duplicates to "0".

This makes no sense, I put the beginning value in, I get a monthly amount from my retirement IRA but there is no place to put the year end value so that an IRR can be calculated. I have a formula that seems to work in excel and I don’t mean the function, but if the year end value is a loss, then it doesn’t work..

The last cell with a value (by date) is the ending value.

I do need to get some examples posted, but I believe this is also covered in Help. But here’s a simple example:

Investment: -10,000

Investment Date: 03/05/2016

withdrawal from investment (your income): 75.00

cash flow date: 06/08/2016

withdrawal: 75.00

cash flow date: 09/08/2016

new investment: -2,000.00

cash flow date: 10/01/2016

final value: 8,125.00value date (in the cash flow section) 12/31/2016The final value is the amount you could withdrawal from the investment to close it out. The above shows there has been a loss since the amount available to withdrawal on the IRR date (valuation date) is less than what had been invested

>>> but if the year end value is a loss, then it doesn’t work..The user is not entering the gain or loss. The calculator calculates the gain (or loss). The user enters investments and withdrawals.

I like to think of it this way – when you are making an investment, you are writing a check. The amount comes out of your checking account and is thus negative. When you get earning back from your investment, the amount goes into your checking account and are positive.

And with the cash flow entries, don’t worry if they are out of order, the calculator sorts them. If you miss one, put it at the end.

Hope this helps.

Thanks, I’ll try it again. I ended up doing it long hand but it wasn’t compounded the way I think it’s supposed to be. I did 5 years and went to bed at 7 a.m. this morning. I did it this way

10000 current value

-12000 original investment

= -2000

+1200 an exp of taking $100 each month & I’m adding this to the -2000

because withdrawals I make shouldn’t negatively impact

financial advisor

= -800

12000 divided by original investment

= -0.067%

We’ll see how close my example above matches when I try it again. I do remember buying some Pine Grove software a few years ago, it’s on my desktop. I’m on my laptop. I found it, it is an IRR calculator and I put in the data about, I didn’t write down the result but it was -6.xx% and that was putting the $100 each month as positive, if I put them in as negative because it is an outflow, the result changed to -22xx% and this was definitely wrong, it also added the 1200 to the 2000 but in the first example the amount was -800 which is what I believe it should be. So I don’t know is -6% or -0.06% correct? I’ll have to try a couple of the positive ones where the ROR was double digits. I could see the above being multiplied by 100 but not say 14.3%

In your example, the IRR is negative, if I understand you correctly.Think of it this way, there are only 3 important numbers.

-12,000 invested

1,200 returned to you

10,000 final value

You’ve taken out from the investment $1,200 and it’s current value is $10,000 = 11,200. There is a loss of $800.

Therefore, the internal rate of return has to be negative.

This really answered my problem, thank you!

https://www.youtube.com/watch?v=r_lQdwJgdfk

Respected sir I want to take loan amount of RS 300000 from Mahendra finance and I want to pay monthly installment of the RS 20000/month, what will be the IRR

Interest rates , thank you

Are you asking how you set up the calculation? If so, you can enter the loan amount as a positive value and each payment as a negative value.

hi karl can you help with this one- i contributed from 1 may 02 to 1 may 16

$680301 and my total invesment is now 160 697 how do i work out my return of the above calculator/?

I’ll try, but I may need some more details. When figuring the IRR, totals aren’t really what’s needed. Do you know all the investment amounts and withdrawals, and their dates? At a high level, what you are going to need to do is to enter each investment on the date it was made as a negative amount. And if you have withdrawals along the way, enter those as positive amounts, again on the dates they happened. And the final entry can be today’s date and the value of the investment account. That is, if you were to liquidate the account(s) today, how much would you get? That’s a positive value. Once these values are entered, click “calc” of course.

Is this enough to get you started? If not, please ask a more specific question as to what is not clear.

Hi Karl,

Thank you for the calculator…but when I want to print the detail it only gives me print screen. Am I missing a step?

No, you didn’t miss anything, I did. I need to update the calculator so that all the cash flows get printed. If you need to print a calculation in the mean time, you can buy the Windows version of this calculator for $4.95. Click on the “Store” menu choice at the top of any page and scroll down the list for IRR calculator. (Windows only.)

Very helpful. It would be great if one could directly enter dates, rather than use only calendar entries. I was calculating IRR for investments started in 2000, so required many back steps of calendar.

Overall, I appreciate intuitive nature of table. Results seem right on

Thanks

Can you tell me if you are using a desktop or a tablet or phone? There might be a difference in how the calculator work across devices.

If you are using a desktop computer or notebook, you should be able to very easily type in the date. When you type the date, just type numbers however. Don’t type any of the slashes between the date parts.

I did notice that the calendar seems to cover part of the date on smaller screens, but you should still be able to type the date. Also, you don’t have to worry about typing the dates in order – the computer is smart enough to sort them :-).

Still, it does need to be made smoother.

Hello, I’ve entered what I believe to be the correct negative and positive formatted values into the calculator. But I am continually receiving an “IRR cannot be calculated” error. Basically the numbers are as follows:

Initial Investment: -$5000.00 (04/08/2008)

Premium payment: -$225.41 (03/08/2013)

Premium payment: -$450.83 (08/08/2013)

Premium payment: -$450.83 (08/01/2014)

Premium payment: -$450.83 (08/26/2015)

Protected Return: $9,090.86 (12/31/2016)

I’m fairly sure that the Initial Investment should be a negative number as well as the premium payments. The Projected Return was entered as a positive number.

Would you have any ideas as to what I’m doing incorrectly that is creating the error?

Thanks

Hi, using your inputs, I get an irr of 4.463%. My guess is, that while you had all the amounts correctly entered, there was probably an error with the dates.

Note, you should be able to right click on this image and select view in another tab to see the image at its full size.

Hi Karl, I tried inputting the numbers and dates exactly as you did several times and still got no results. I was using a Safari browser and then tried re-entering the data in Google Chrome and suddenly got the same calculations as you did. No more Safari !! Google Chrome from now on !!

Thanks again

Hi. Glad to hear that you got it working. Thanks for letting me know. I’ll take a look at why there’s a problem with Safari.

So I switched from ROI to IRR for my investment in energy conservation.

I assumed (at this point), that I draw my ‘benefit’ (return) annually. I put in the start date of 1/1/17. It forces me to input the return (so it could be different every year, right (and most likely would be w/ the inflation of energy each year)). I assume at this point that the annual benefit draw is always the same. However, it lists the draws as bi monthly; forcing me to ‘hunt’ for each year and then input my draw/return.

And it doesn’t let me input the values for 15 years … only about 6. I hope I don’t have to input BOTH the date and the amount for each of my years.

Am I doing something wrong?

It’s interesting that the analysis tool we were told to use generates an ROI for this type of scenario, not an IRR.

Oh boy, I see there is a problem and the calculator is not working as intended. When the page first loads, the cash flow frequency is monthly and the dates should reflect that and they do. If a user changes the frequency, then the dates should update. So, in your case, you would set an initial investment date of Jan. 1, 2017 and the cash flow to annually. Doing this should update the dates to Jan. 1, 2018, Jan. 1, 2019, Jan. 1, 2020….

I’ll try to have a fix in for this by early next week.

To your questions. IRR, ROR and ROI are all annualized return on investment calculations.

Mark, I just released an update to this calculator per the notes above. Initializing the dates for your particular cash flow needs now work much better (I hope!). Please see notes above. Thanks for taking the time to mention you were having a problem with this.

Is a ROR (rate of return) the same as ROI?

Yes.

This is so useful, and it took me so long to find. While Quicken is essential for keeping track of investments (IMHO), it often does not correctly calculate the IRR.

THANK YOU SO MUCH!!!

You’re so welcome. Please come back again and please tell your friends about this site.

Hi Karl –

Thanks for providing this model. Question: You had mentioned in your Dec 1st update “The selection of frequency of cash flow itself has no impact on the calculated result.” Can you please explain this?

Running this in your model, actually shows that the frequency DOES have an impact on the calculation.

For example, if you were to receive “monthly” payments vs. “quarterly” payments, for the same initial Investment, the IRR should go up due to time value of money.

HERE ARE THE INPUTS USING YOUR FINANCIAL MODEL:

Initial Investment: -$5,500

Investment Date: 5/1/2017

Cash Flow Frequency: MONTHLY

No Date Amount No Date Amount

1 06/01/2017 1,000.00 2 07/01/2017 1,000.00

3 08/01/2017 500.00 4 09/01/2017 500.00

5 10/01/2017 1,000.00 6 11/01/2017 1,000.00

7 12/01/2017 1,000.00

IRR = 29.305%

As Compared to: QUARTERLY PAYMENTS

Initial Investment: -$5,500

Investment Date: 5/1/2017

Cash Flow Frequency: QUARTERLY

No Date Amount No Date Amount

1 08/01/2017 1,000.00 2 11/01/2017 1,000.00

3 02/01/2018 500.00 4 05/01/2018 500.00

5 08/01/2018 1,000.00 6 11/01/2018 1,000.00

7 02/01/2019 1,000.00

IRR = 8.98%

You’re right. But that’s not what I meant.

“The selection of frequency of cash flow itself has no impact on the calculated result.” Can you please explain this?

The frequency selection is only a tool for creating dates. A user should select a frequency that most closely matches the actual cash flow for convenience. But if a user has an initial date of Jan 1 and selects “Monthly” and enters cash flows on Jan 1, Apr 1, Jul 1 and Oct 1 they will get the same calculated IRR as if they selected quarterly cash flows and enter the cash flows on the same dates.

So, the

selectionof frequency has no impact, but the actual frequency certainly does. The calculator is looking at the dates themselves.Does this clarify?

Thank you Karl. Yes, that answers my question.