Using Excel to calculate IRR with unequal timing of cash flows In the chart below, we have management's estimation for the initial cost and cash flow returns for both the expansion and new ...

Internal rate of return (IRR) is one of several well-known formulas used to evaluate prospective investments, especially ones that generate cash flows, like in real estate.

Learn about the internal rate of return (IRR), how to calculate it and why it matters to traders.

If not, the investment is probably not worth pursuing. The actual formula to calculate IRR is rather complex, but fortunately there are several good IRR calculators available online, like this one.

The easiest way to calculate IRR is to use the formula built into Excel. Simply type “=IRR” in an empty cell and follow the prompts to complete the formula.

IRR is used to calculate the potential annual returns of an investment over time, while taking into account cash flow — the money coming in and out.

How do you calculate IRR? How do you make that comparable with other funds and their underlying portfolio investments?