IRR Calculator Online
Use this calculator to determine the Internal Rate of Return (IRR) for your investment.
Frequently Asked Questions (FAQ)
1. What is IRR?
IRR (Internal Rate of Return) is a financial metric used to evaluate the profitability of an investment.
2. How do you calculate IRR?
IRR is calculated using the cash inflows and outflows of an investment, considering the time value of money.
3. Why is IRR important?
IRR helps you understand the rate at which your investment is growing or shrinking.
4. Can IRR be negative?
Yes, IRR can be negative if the investment is expected to result in a loss.
5. What is a good IRR?
A good IRR depends on your investment goals and the risk profile of the project.
6. What if IRR is higher than my discount rate?
If the IRR exceeds the discount rate, the investment is generally considered profitable.
7. Can IRR be used for all investments?
IRR is mostly used for projects with uneven cash flows or investments with long-term horizons.
8. What is the difference between IRR and NPV?
IRR is the rate at which NPV equals zero. NPV measures the value of cash flows at a specific rate.
9. How accurate is the IRR calculator?
The calculator is accurate as long as you provide correct cash flows and the appropriate discount rate.
10. Can IRR be used for personal finance?
Yes, IRR can be used to assess personal investments like savings, bonds, or mutual funds.