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Disclaimer
This calculator provides estimates for informational purposes only and does not constitute financial, medical, legal, or tax advice. Always consult a qualified professional about your specific situation.
How This Calculator Works
IRR (Internal Rate of Return) is the annual return an investment’s own cash flows imply —
specifically, the discount rate at which the investment’s net present value works out to
exactly zero. Enter the upfront investment and each period’s cash flow, and this calculator
finds that rate.
Unlike the Payback Period Calculator, which simply asks
how long until the money comes back, IRR accounts for the time value of money: a dollar returned
next year is worth less than a dollar returned today, and IRR is the single rate that captures
that trade-off across every cash flow at once. It’s directly comparable to a savings account’s
interest rate or another investment’s own IRR, which is what makes it one of the most widely used
capital-budgeting metrics for comparing different projects or investments.
The Formula
There’s no simple closed-form formula for IRR — it has to be solved numerically, the same way
the Annual Percentage Rate (APR) Calculator solves for an effective interest rate. IRR is the
rate r that satisfies:
0=−(Initial Investment)+∑[(1+r)tCash Flow in period t]
This calculator searches for that rate using bisection — repeatedly narrowing a range of possible
rates until the resulting net present value converges on zero.
Worked Example
A $10,000 investment returning $3,000, $4,000, $5,000, and $2,000 over four years:
Solving for the rate at which those four cash flows, discounted back to today, exactly equal
the $10,000 invested gives an IRR of ≈ 15.32%.
Cómo funciona esta calculadora
La TIR (Tasa Interna de Retorno) es el rendimiento anual que implican los propios flujos de
efectivo de una inversión — específicamente, la tasa de descuento a la cual el valor presente neto
de la inversión resulta ser exactamente cero. Ingresa la inversión inicial y el flujo de efectivo
de cada período, y esta calculadora encuentra esa tasa.
A diferencia de la Payback Period Calculator,
que simplemente pregunta cuánto tiempo tarda en recuperarse el dinero, la TIR tiene en cuenta el
valor del dinero en el tiempo: un dólar recibido el próximo año vale menos que un dólar recibido
hoy, y la TIR es la única tasa que capta esa disyuntiva a lo largo de todos los flujos de efectivo
a la vez. Es directamente comparable a la tasa de interés de una cuenta de ahorros o a la propia
TIR de otra inversión, lo que la convierte en una de las métricas de presupuesto de capital más
utilizadas para comparar distintos proyectos o inversiones.
La fórmula
No existe una fórmula cerrada simple para la TIR — debe resolverse numéricamente, de la misma
manera en que la Annual Percentage Rate (APR) Calculator resuelve una tasa de interés
efectiva. La TIR es la tasa r que satisface:
0=−(Inversioˊn inicial)+∑[(1+r)tFlujo de efectivo en el perıˊodo t]
Esta calculadora busca esa tasa mediante bisección — reduciendo repetidamente un rango de tasas
posibles hasta que el valor presente neto resultante converge en cero.
Ejemplo resuelto
Una inversión de $10,000 que devuelve $3,000, $4,000, $5,000 y $2,000 a lo largo de cuatro
años:
Resolver la tasa a la cual esos cuatro flujos de efectivo, descontados a valor presente,
equivalen exactamente a los $10,000 invertidos da una TIR de ≈ 15.32%.
ROI (Return on Investment) is a simple percentage return over the whole holding period, with no regard for when cash arrived. IRR accounts for the time value of money — a dollar returned sooner is worth more than a dollar returned later — which makes it the better metric for comparing investments with cash flows spread out differently over time.
What does a negative IRR mean?
A negative IRR means the investment never fully recovers what it cost, even ignoring the time value of money entirely — the total cash returned falls short of the initial investment. The more negative the IRR, the larger that shortfall relative to how long the money was tied up.
What counts as a good IRR?
It depends entirely on what else you could have done with the money. A common rule of thumb compares IRR to your cost of capital or a benchmark return (like the stock market's long-run average) — an IRR below that benchmark usually means the investment isn't worth the risk and opportunity cost of tying up the money.
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