Irr Calculator — Calculations & Slabs for FY 2026-27

IRR is the annual rate of growth an investment is projected to generate. It is the discount rate that makes the Net Present Value (NPV) of all cash flows from a project equal to zero. Businesses use it to compare the profitability of different capital investment projects.

Internal Rate of Return (IRR) tells you the percentage rate of return the project is expected to generate. While NPV is expressed in currency, IRR is expressed as a percentage. This ensures full compliance with the latest regulations, allowing you to estimate values correctly and avoid common filing errors.

A negative IRR means that the cash flows generated by an investment are less than the initial cash outlay. In other words, the project is projected to lose money overall, and you will not recover your initial investment. This ensures full compliance with the latest regulations, allowing you to estimate values correctly and avoid common filing errors.

Generally, a project is considered a good investment if its IRR is greater than the company's cost of capital (or hurdle rate). When choosing between multiple mutually exclusive projects, the one with the highest IRR is typically preferred, assuming equal risk.

IRR has a few major limitations: it assumes all interim cash flows are reinvested at the IRR rate itself (which is often unrealistic), and projects with alternating positive and negative cash flows can produce multiple IRRs or no mathematical solution at all.