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IRR Sensitivity Matrix
How IRR changes with combined adjustments to cash flows (rows) and initial investment (columns). Green = above hurdle, Red = below hurdle.
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IRR vs Asset Class Benchmarks
Your project's IRR compared to typical returns by asset class.
🔑 Break-Even Investment Solver
What is the maximum initial investment that still delivers your hurdle rate? (Binary search solver using current cash flows.)
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30-Year Reinvestment Projection
If you reinvest your initial capital at the calculated IRR rate continuously, how does it compare to other asset classes over 30 years?
🏁 Wealth Milestones
At what year do you 2×, 5×, 10×, and 20× your initial investment at the IRR rate?
Target Multiple
Year Reached
Value
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🎯 Goal Seeker — Target IRR
What uniform annual cash flow (all years equal) do you need to hit a target IRR with your current initial investment?
%
Click Solve to find the required cash flow.
Frequently Asked Questions
What is the Internal Rate of Return (IRR)?
IRR is the annualized discount rate that makes the Net Present Value (NPV) of all future cash flows equal to zero. In practical terms, it is the compounded annual return generated by an investment. A project with IRR of 18% earns the equivalent of 18% compounded annually on the invested capital.
What is MIRR and why is it better than IRR?
MIRR (Modified IRR) corrects two key flaws of standard IRR: (1) It separates the finance rate (cost of capital for negative CFs) from the reinvestment rate (return assumed on positive CFs), whereas IRR assumes reinvestment at the IRR itself — which is often unrealistically high. (2) It always produces a unique result even when cash flows change sign multiple times. When IRR is very high, MIRR provides a more realistic estimate of actual returns.
What is a hurdle rate and how does it relate to IRR?
A hurdle rate is your minimum required return — usually your weighted average cost of capital (WACC) or a project-risk-adjusted rate. Rule: if IRR > hurdle rate, accept the project (it creates value). If IRR < hurdle rate, reject it (it destroys value). The NPV at the hurdle rate quantifies the exact dollar value created or destroyed.
What is MOIC and the Profitability Index?
MOIC (Multiple on Invested Capital) = total cash received / total cash invested. A MOIC of 2.5x means you received $2.50 for every $1 invested. It is a simple return measure that ignores time. The Profitability Index (PI) = PV of future inflows / initial investment. PI > 1 means the project creates value; PI < 1 means it destroys value at your hurdle rate.
What does the NPV Profile chart show?
The NPV Profile plots NPV (y-axis) versus discount rate (x-axis). The curve crosses zero at exactly the IRR. Points to the left of the IRR crossing have positive NPV (project creates value). Points to the right have negative NPV (project destroys value). The vertical gold line marks the IRR; the indigo line marks your hurdle rate. The gap between these two lines visually shows your margin of safety.
When can IRR give misleading results?
IRR can mislead when: (1) cash flows change sign more than once, potentially creating multiple valid IRRs; (2) comparing projects of different sizes — a small project with 40% IRR may add less absolute value than a large project at 15% IRR; (3) the reinvestment-at-IRR assumption is unrealistic. Use MIRR and NPV alongside IRR for a complete picture.
What are typical IRR targets by asset class?
Typical benchmarks: Core real estate 8–12%, Value-add real estate 12–18%, Small business 15–25%, Private equity buyouts 15–25%, Venture capital 20–30%+, S&P 500 historical ~10%, Investment-grade bonds 4–6%. Always compare to your specific cost of capital and project risk profile.