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IRR Calculator Help

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 "Initial Investment Date", the date for the cash flows will be calculated using the selected "Cash Flow Frequency" to calculate the next 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 o 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".

11 thoughts on “irr-calculator

  1. 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: 8,125.00
      value date (in the cash flow section) 12/31/2016

      The 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%

  2. 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.

  3. 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.

  4. 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.

  5. 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.)

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