How to calculate IRR (internal rate of return)
✓ Verified in LibreOffice 25.8.7.3The 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 | =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. Every formula here is confirmed by actually executing it.
Functions used
IRR — see full Excel, Google Sheets & LibreOffice compatibility for each.