Fast, Simple & Accurate Online Calculators
IRR Calculator UK
IRR Calculator UK
Calculate IRR
Internal Rate of Return
-£
Initial investment amount (enter as positive, it will be negative).
£
Cash flow after year 1.
£
Cash flow after year 2.
£
Cash flow after year 3.
£
Cash flow after year 4.
£
Cash flow after year 5.
IRR: The discount rate that makes the net present value (NPV) of all cash flows equal to zero.
Example £10,000 investment, £3k, £4k, £5k returns → ~12.8% IRR
IRR Analysis
Enter your cash flows, then click Calculate IRR.
What Is IRR?
IRR (Internal Rate of Return) is the discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero. This IRR calculator UK helps you evaluate the profitability of investment projects.
How to Use the IRR Calculator
Enter your initial investment (as a positive number) and your expected cash flows for years 1-5. Click Calculate IRR to see the internal rate of return, NPV and profitability analysis.
How IRR Is Calculated
NPV = Σ(Cash Flow / (1 + IRR)^year) = 0
IRR is found through iterative trial and error.
IRR is found through iterative trial and error.
IRR Example
Example: £10,000 investment, cash flows: £3,000, £4,000, £5,000
- Initial investment: -£10,000
- Year 1: £3,000
- Year 2: £4,000
- Year 3: £5,000
- IRR: ~12.8%
Understanding IRR
- IRR > Cost of Capital: Investment is profitable
- IRR = Cost of Capital: Investment breaks even
- IRR < Cost of Capital: Investment is not profitable
- Higher IRR: More attractive investment
IRR vs ROI vs CAGR
- IRR: Considers time value of money, best for projects with multiple cash flows
- ROI: Simple percentage return, ignores timing
- CAGR: Average annual growth rate, assumes steady growth
Good IRR Benchmarks
- Savings Account: 0.5-4%
- Bonds: 2-5%
- Property Investment: 5-10%
- Business Projects: 10-20%
- Startups: 20%+ (high risk)
- Cost of Capital: Usually 5-10% (depends on risk)
Common IRR Mistakes
- Not including all cash flows — include all periods
- Using the wrong sign — initial investment is negative
- Ignoring time value — IRR accounts for timing
- Comparing different time periods — use annualised rates
- Forgetting reinvestment assumption — IRR assumes reinvestment at IRR rate
Important: This calculator provides estimates only. Actual investment returns are not guaranteed. Always seek professional financial advice.
Important Assumptions and Limitations
- Assumes all cash flows are reinvested at the IRR rate
- Does not account for inflation
- Does not include fees or charges
- Does not account for taxes on returns
- Results are estimates, not guaranteed
Frequently Asked Questions
What is IRR?
+
How is IRR calculated?
+
What is a good IRR?
+
What is the difference between IRR and ROI?
+
What is the difference between IRR and CAGR?
+
Why is IRR important?
+
Are the results exact?
+
For investment planning, visit our Investment Calculator UK. For ROI, try our ROI Calculator UK.