Investment Return Calculator
Learn more about how different IRR figures can impact your projected return in this interactive calculator.
What is IRR?
The Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments, calculated as the discount rate that brings the net present value (NPV) of all cash flows to zero. It’s commonly used in capital budgeting to compare the attractiveness of different projects or investments.
after 5 years you could expect a return of:
Highlights:
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User-Friendly Interface
No financial expertise required—our tool is designed for ease of use.
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Accurate Results
Receive precise IRR calculations, ensuring you never miss an important detail in your investment analysis.
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Compare Investments
Explore real-life case studies, step-by-step examples, and practical tools to apply these metrics to your own investment opportunities.
What is a good IRR?
You want a positive IRR—a negative IRR indicates you’d lose money on the investment. Generally, an IRR of 18% or 20% is considered very good in real estate.
Generally speaking, a high percentage return (greater than 10%) indicates a successful investment, while a low IRR (less than 5%) might mean investors should reconsider their investment options.
Learn more about real estate investmenting down below...
Who Is This For?
Real-Life Applications:
Multifamily Real Estate: Evaluate cash flow, financing, and exit strategy for better deal evaluation.
Private Equity & Venture Capital: Analyze returns across different stages of your portfolio.
Commercial Properties: Calculate returns for long-term investments with varying cash flows.
FAQs
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IRR is a key metric used by investors to assess the profitability of an investment. It represents the annualized rate of return that makes the net present value (NPV) of all cash flows from the investment equal to zero. A higher IRR indicates a more profitable investment. This tool helps you evaluate whether an investment meets your target return and compare different investment opportunities.
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To use the IRR Calculator, simply enter your initial investment amount, expected cash flows over time, and your exit value (final sale price). The calculator will automatically calculate your IRR, allowing you to easily assess the return on your investment. This tool helps streamline your decision-making process by providing a clear snapshot of potential returns.
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The IRR Calculator can handle negative cash flows, such as operating losses or costs during certain years. If the total cash inflows are less than the initial investment, the tool will reflect a negative IRR, which indicates that the investment may not meet your desired return or could be a loss. You can adjust your input values to explore different scenarios.
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The IRR Calculator provides accurate results based on the data you enter. However, the accuracy of the IRR calculation depends on the accuracy and completeness of the input data, such as cash flow projections and the final exit value. Always ensure that your data is realistic and reflective of market conditions to get the most reliable results.
