How to calculate IRR (internal rate of return)
✓ Verified in LibreOffice 25.8.7.3 ✓ Verified in Google Sheets (2026-08-30)The annualized return that makes a project break even — compare investments by the single rate at which their cash flows net to zero.
The formula
| App | Formula | Notes |
|---|---|---|
| Excel (desktop) | =IRR(A2:A6) | A2:A6 = cash flows in time order, starting with the negative initial outlay. IRR needs at least one negative and one positive value. Format the result as a %. |
| Google Sheets | =IRR(A2:A6) | Identical. For irregular dates use XIRR(amounts, dates). |
| LibreOffice Calc | =IRR(A2:A6) | Identical; supply a [guess] second argument if it fails to converge. |
How it works
IRR finds the discount rate at which a series of cash flows has a net present value of zero — effectively the project's compounded annual return. Feed it the flows in chronological order with the up-front cost as a negative first value; here investing 1000 and receiving 300/400/500/600 over four years returns about 24.89%. Because it's solved iteratively, IRR needs at least one negative and one positive flow, and unusual sign patterns can yield multiple valid answers — pass a [guess] argument to steer convergence. Two big caveats: the periods must be evenly spaced (use XIRR with actual dates when they aren't), and IRR assumes interim cash is reinvested at the IRR itself, which flatters high rates — MIRR lets you set a realistic reinvestment rate. Compare a project's IRR against your required rate of return (hurdle rate): above it, the investment adds value.
Verified, not just documented
We ran =ROUND(IRR(A2:A6),4) in LibreOffice 25.8.7.3 (headless, with forced recalculation) and it returned 0.2489 — exactly the expected result. We then ran the same formulas in Google Sheets, executed 2026-08-30: a formula-only workbook goes into Google Drive, which converts it to a Sheet and recalculates every formula with Google’s own engine, and comes back out as .xlsx carrying the values Google computed. It returned 0.2489 for the worked example, the same value LibreOffice produced. Both engines’ numbers on this page are executed results. The Excel formula follows Microsoft’s official documented syntax — we do not run desktop Excel.
Functions used
IRR — see full Excel, Google Sheets & LibreOffice compatibility for each.