Use this free tool to calculator your internal rate of return using your projected annual cash flow.
Calculate your internal rate of return (IRR) in just minutes using your projected cash flow for 5 years, your estimated growth rate, and discount rate. This calculator is free to use.
The internal rate of return is a common metric used by investors when considering how profitable an investment may be. The rate is calculated as a percentage and is technically a discount rate that uses projected cash flow and future growth assumptions in its calculation.
Generally IRR is used when considering possible investments as well as trying to project if new operations or expansion is more profitable.
Internal rate of return (IRR) and return on investment (ROI) are often used interchangeably when they are in fact different metrics. ROI is a calculation to estimate the total return of the life of the investment compared to IRR which is more of an annual growth rate of the return. both metrics will be similar in the short term but will vary more greatly in the long term.
Every investment opportunity is unique and there are many factors both numeric and not that will dictate what a good return looks like. Also, depending on the industry, portfolio, or comfort level of the investor they may have a different rate of return that they would consider to be good. Some studies have shown that an IRR of 22% or above would be considered a good IRR, but factors like risk can change if it's good or not.