IRR & XIRR calculator.
Compute internal rate of return for any series of cash flows. IRR for regular intervals, XIRR for actual dates. NPV at your chosen discount rate.
Cash flow series
Your cost of capital or LP hurdle rate.
IRR, XIRR, NPV — what they are and when to use which.
IRR (Internal Rate of Return) is the discount rate at which the net present value of a series of cash flows equals zero. Conceptually: it's the annualised return your investment is "effectively" earning. Mathematically, we're solving for r in:
NPV = Σ (CF_t / (1 + r)^t) = 0
where CF_t is the cash flow at period t. The IRR variant in this calculator assumes each row in your input is one period apart (typically a year).
XIRR generalises IRR to irregular dates. Instead of t being an integer period count, it's the day-fraction-of-a-year between each flow and the first one. This is what Excel's XIRR function computes, and it's the right metric for fund cash flows where capital calls and distributions don't fall on anniversaries.
NPV (Net Present Value) is the same NPV equation but evaluated at a chosen rate (your cost of capital or hurdle rate). A positive NPV means the investment beats your hurdle.
Solving for IRR. NPV(r) = 0 has no closed-form solution for arbitrary cash flow series, so we use Newton-Raphson iteration starting from r = 10%. If that fails (multiple roots, no real root, divergence), we fall back to bisection between −99.99% and 1000%. The XIRR sign reference line on the chart above is the rate at which NPV crosses zero.
When to use which. For modelling a simple two-flow exit (invest today, exit in N years), IRR and XIRR give the same answer if the gap is exactly N years. For real fund cash flows with staggered drawdowns and dated distributions, always use XIRR. For comparing returns to a hurdle (e.g. SEBI AIF 8% LP preferred return), NPV at the hurdle rate tells you whether you cleared it.
Indian context. Mutual fund SIP returns are reported as XIRR because contributions are dated. AIF LP statements show XIRR (net of fees and carry). Section 80C tax-saver returns are typically pre-tax XIRR. Comparing pre-tax vs post-tax IRR matters a lot for high-net-worth Indian investors above the 30% income-tax slab.
Caveats. IRR/XIRR assume reinvestment of intermediate flows at the same rate — often unrealistic. Multiple IRRs are possible when cash flow signs change more than once (invest → dividend → reinvest → exit); the calculator returns the first root found. For mission-critical reporting, sanity- check against MOIC + NPV at multiple discount rates.
Questions fund managers ask.
What is IRR?+
IRR (Internal Rate of Return) is the discount rate at which the net present value of a series of cash flows equals zero. It is the annualised effective return on an investment when cash flows occur at regular intervals (typically yearly).
What is XIRR and how is it different from IRR?+
XIRR is IRR for irregular cash flows — it uses actual dates instead of assuming regular periods. If your investments and returns happen on specific dates rather than at year-ends, XIRR gives you the correct annualised return. Excel and Google Sheets both implement XIRR; the math uses the same NPV = 0 root-finding (Newton-Raphson) with day-fraction year periods.
Can IRR be negative?+
Yes. If your total returns are less than your total investment, IRR is negative. For example, investing ₹100 and getting back ₹80 five years later gives an IRR of roughly −4.4%.
What is NPV?+
NPV (Net Present Value) is the sum of all cash flows discounted back to today at a chosen rate (your cost of capital or hurdle rate). A positive NPV means the investment beats the discount rate. NPV is what you minimise to zero when solving for IRR.
Why does IRR sometimes fail or return weird numbers?+
IRR can have multiple roots when cash flows change sign more than once (e.g. invest, dividend, reinvest, exit). Some series have no real IRR. Most root-finders (including the Newton-Raphson method used here) converge to the first root they find — sanity-check against an NPV chart at multiple rates.
What is a good IRR for an Indian VC fund?+
Top-quartile Indian VC funds target net IRR (after fees and carry) of 18–25% over a 10-year fund life. Median performance has historically been 8–15%. LPs typically benchmark against the BSE 500 or Nifty 50, which have delivered ~12–14% CAGR over long periods.
Want IRR built into your fund reporting?
Kapitalyze Fund OS computes XIRR continuously against your live LP register, capital calls, and distributions — with SEBI-compliant LP statements and full audit trail.