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Page written by Ian Hawkins. Last reviewed on March 10, 2026. Next review due July 1, 2027.
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
The internal rate of return is a financial metric used to evaluate the profitability of an investment or project. It represents the annualised rate of return that an investment is expected to generate over its life. Essentially, the IRR is the discount rate that makes the net present value of all cash flows from the investment equal to zero.
Investors use the IRR to assess the attractiveness of an investment opportunity and compare it with alternative options. A higher IRR typically indicates a more favourable investment, as it suggests a higher return relative to the investment and the risk involved. Conversely, a lower IRR may suggest a less attractive investment opportunity.
The IRR is widely used in finance and investment analysis to make informed decisions about allocating capital and evaluating the potential return of investments.
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