IRR solves for r in sum of CF_t / (1 + r)^t = 0 across all periods t, including negative initial investment and positive later receipts. The result is usually annualized for comparison with hurdle rates and cost of capital. Spreadsheet IRR functions may differ by a few basis points if they assume 365-day years; use this page for consistent teaching examples.
Multiple IRRs can exist if cash flows switch signs more than once (invest, receive, invest again). This tool assumes a conventional pattern unless documented otherwise. Reinvestment at IRR is a theoretical assumption, not a bank rate guarantee. Modified IRR (MIRR) is not calculated here but can rank projects differently when reinvestment rates differ from IRR.
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