Return Rates With IRR
Compute the internal rate of return on a cash flow series.
What IRR Tells You
NPV asks: at a given rate, is this project worth it? IRR (Internal Rate of Return) flips the question: what rate would make this project exactly break even?
IRR is the discount rate at which the NPV equals zero. It is the project's own built-in return, expressed as a single percentage.
People love it because it is easy to compare against a target return like 10%.
The IRR Syntax
The function is =IRR(values, [guess]).
- values — a range of cash flows, in order, one per period.
- guess — optional starting estimate for the calculation, default 10%.
Unlike NPV, IRR has no separate rate argument — finding the rate is the whole point.
=IRR(B2:B7)