IRR Calculator (Approximate)
IRR is the discount rate that drives NPV to zero. Put in 30,000,000 and take out 10,000,000 a year for five years and the IRR is about 19.86%. The simple return — 10,000,000 over 30,000,000, or 33.3% — sits far above it, because the tenth million arriving in year five is worth less than one arriving today. The 36-month payback is shown alongside because IRR says nothing about when the money comes back.
Your numbers
Approximate IRR
19.86%
Return
33.3%
Payback period
36mo
Formula
Invested = Net cash a year × (1 − (1 + Approximate IRR ÷ 100) ^ −Years) ÷ (Approximate IRR ÷ 100) → Approximate IRR
It is called approximate because the cash flow is held level. Real projects ramp up or tail off, and the same total spread differently shifts IRR by several points. Where the total returned never reaches the outlay the IRR is negative, and this page shows zero instead. IRR is also blind to scale: 30% on a million and 15% on a billion look ranked the wrong way round.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| InvestedEverything you put in; include fees or the return comes out flattering. | 30,000,000 | 0 and up |
| Net cash a yearNet cash arriving each year; this page assumes the same amount every year. | 10,000,000 | 0 and up |
| Years (yr)How many years the money stays put; compounding bites harder as this grows. | 5 | 0 ~ 50 |
Step by step
Quick reference table
Results when only Invested changes and everything else stays put.
| Invested | Approximate IRR (%) | Return (%) | Payback period (mo) |
|---|---|---|---|
| 15,000,000 | 60.38 | 66.7 | 18 |
| 22,500,000 | 34.25 | 44.4 | 27 |
| 30,000,000 | 19.86 | 33.3 | 36 |
| 45,000,000 | 3.62 | 22.2 | 54 |
| 60,000,000 | 0 | 16.7 | 72 |
What each result means
| Result | At default values |
|---|---|
| Approximate IRR (%)The discount rate that zeroes the NPV, assuming the cash flow is level. | 19.86 |
| Return (%)How much you made relative to what you put in. | 33.3 |
| Payback period (mo)Months until the investment is back, ignoring the time value of money. | 36 |
Common mistakes
It is called approximate because the cash flow is held level. Real projects ramp up or tail off, and the same total spread differently shifts IRR by several points. Where the total returned never reaches the outlay the IRR is negative, and this page shows zero instead. IRR is also blind to scale: 30% on a million and 15% on a billion look ranked the wrong way round.
Glossary
- Invested
- Everything you put in; include fees or the return comes out flattering.
- Net cash a year
- Net cash arriving each year; this page assumes the same amount every year.
- Years
- How many years the money stays put; compounding bites harder as this grows.
- Approximate IRR
- The discount rate that zeroes the NPV, assuming the cash flow is level.
- Return
- How much you made relative to what you put in.
- Payback period
- Months until the investment is back, ignoring the time value of money.
Frequently asked questions
Q. How is IRR Calculator (Approximate) calculated?
Invested = Net cash a year × (1 − (1 + Approximate IRR ÷ 100) ^ −Years) ÷ (Approximate IRR ÷ 100) → Approximate IRR — IRR is the discount rate that drives NPV to zero. Put in 30,000,000 and take out 10,000,000 a year for five years and the IRR is about 19.86%. The simple return — 10,000,000 over 30,000,000, or 33.3% — sits far above it, because the tenth million arriving in year five is worth less than one arriving today. The 36-month payback is shown alongside because IRR says nothing about when the money comes back.
Q. Can you walk through an example?
With Invested 30,000,000, Net cash a year 10,000,000, Years 5yr, the answer is Approximate IRR 19.86%.
Q. What do I need to enter?
Enter Invested, Net cash a year, Years. The result recalculates as you type, and an empty box counts as zero.
Q. How much does the answer move if I change a number?
Changing only Invested moves the answer to Invested 15,000,000 → Approximate IRR (%) 60.38 and Invested 60,000,000 → Approximate IRR (%) 0. The table below lays out five steps.
Q. How are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
Q. Anything to watch out for?
It is called approximate because the cash flow is held level. Real projects ramp up or tail off, and the same total spread differently shifts IRR by several points. Where the total returned never reaches the outlay the IRR is negative, and this page shows zero instead. IRR is also blind to scale: 30% on a million and 15% on a billion look ranked the wrong way round.
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