IRR Calculator

Net present value answers a narrower question: at the return you require, is this deal worth more than it costs? Everything turns on the discount rate you enter. Use the return you could get on the next comparable deal, not the loan rate, because the loan is how you finance the equity rather than what the equity is worth.

The two tools agree by construction. With the figures loaded above, $10,000,000 in against flows of $650,000, $675,000, $700,000, $725,000 and $13,200,000, the IRR is 10.89% and the NPV at an 8% discount rate is $1,252,833. NPV is positive precisely because the IRR clears the 8% you asked for. Raise the discount rate to 10.89% and the NPV goes to zero. That is the whole relationship between the two numbers.

Both tools assume flows arrive once a year, at year end. Monthly distributions, capital calls mid-hold, and financing costs are not modelled here.

Enter the money you put in as a positive number in the first field, then the cash the deal returns each year, separated by commas. The last figure is usually the year you sell, so it carries both that year’s cash flow and the net sale proceeds. IRR is the discount rate that makes those future flows worth exactly what you paid, which is why a higher number means the money came back faster or larger.

Two things IRR will not tell you. It says nothing about size: 25% on $200,000 of equity is a worse outcome in dollars than 12% on $5 million, and the calculator cannot see the difference. It also assumes every distribution is reinvested at the same rate, which rarely happens, so a very high IRR on a short hold tends to overstate what you will actually earn. Compare deals of similar size and similar hold before you trust the ranking.