When does IRR give misleading results?

IRR assumes interim cash flows are reinvested at the IRR rate, which is unrealistic for high-IRR projects. Use MIRR for a more realistic reinvestment assumption. IRR also fails for non-conventional cash flows with multiple sign changes.

Relative to the hurdle rate. If WACC is 8% and IRR is 15%, the project adds significant value. In private equity, target IRR is typically 20-25%+.

Can a project have multiple IRRs?

Yes. Any project with more than one sign change in cash flows can have multiple mathematically valid IRRs. This is common in mining or environmental cleanup projects.

Internal Rate of Return (IRR) Calculator

Calculate the discount rate at which NPV = 0. IRR is compared to the hurdle rate (WACC); accept projects where IRR > hurdle rate. Uses iterative numerical solution.

Use the full interactive calculator below, or

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Internal Rate of Return (IRR) Calculator

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Frequently Asked Questions

When does IRR give misleading results?

What is a good IRR?

Can a project have multiple IRRs?