This article describes the formula syntax and usage of the IRR function in Microsoft Excel.


Returns the internal rate of return for a series of cash flows represented by the numbers in values. These cash flows do not have to be even, as they would be for an annuity. However, the cash flows must occur at regular intervals, such as monthly or annually. The internal rate of return is the interest rate received for an investment consisting of payments (negative values) and income (positive values) that occur at regular periods.


IRR(values, [guess])

The IRR function syntax has the following arguments:


IRR is closely related to NPV, the net present value function. The rate of return calculated by IRR is the interest rate corresponding to a 0 (zero) net present value. The following formula demonstrates how NPV and IRR are related:

NPV(IRR(A2:A7),A2:A7) equals 1.79E-09 [Within the accuracy of the IRR calculation, the value is effectively 0 (zero).]


Copy the example data in the following table, and paste it in cell A1 of a new Excel worksheet. For formulas to show results, select them, press F2, and then press Enter. If you need to, you can adjust the column widths to see all the data.

-$70,000Initial cost of a business
$12,000Net income for the first year
$15,000Net income for the second year
$18,000Net income for the third year
$21,000Net income for the fourth year
$26,000Net income for the fifth year
=IRR(A2:A6)Investment’s internal rate of return after four years-2.1%
=IRR(A2:A7)Internal rate of return after five years8.7%
=IRR(A2:A4,-10%)To calculate the internal rate of return after two years, you need to include a guess (in this example, -10%).-44.4%

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