Results
Enter your investment and cash flow details to calculate the IRR.
.irr-calculator-container {
font-family: sans-serif;
max-width: 700px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
background-color: #f9f9f9;
display: flex;
flex-wrap: wrap;
gap: 30px;
}
.calculator-form, .calculator-result {
flex: 1;
min-width: 300px;
}
.form-group {
margin-bottom: 15px;
}
.form-group label {
display: block;
margin-bottom: 5px;
font-weight: bold;
}
.form-group input[type="number"], .cash-flow-input input[type="number"] {
width: calc(100% – 22px);
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box;
}
.cash-flows-section h4 {
margin-top: 20px;
margin-bottom: 10px;
}
.cash-flow-input {
margin-bottom: 10px;
display: flex;
align-items: center;
gap: 10px;
}
.cash-flow-input label {
flex: 1;
font-weight: normal;
}
.cash-flow-input input[type="number"] {
flex: 2;
}
button {
padding: 10px 15px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 14px;
margin-top: 15px;
}
button:hover {
background-color: #0056b3;
}
.calculator-result h3 {
margin-top: 0;
color: #333;
}
#result p {
font-size: 16px;
line-height: 1.5;
color: #555;
}
code {
background-color: #e0e0e0;
padding: 2px 5px;
border-radius: 3px;
}
ul {
list-style: disc;
margin-left: 20px;
margin-bottom: 15px;
}
var periodCount = 5; // Start with 5 periods as per initial inputs
function addCashFlowInput() {
periodCount++;
var container = document.getElementById("cashFlowsContainer");
var newDiv = document.createElement("div");
newDiv.className = "cash-flow-input";
var label = document.createElement("label");
label.innerHTML = "Period " + periodCount + " Cash Flow:";
label.htmlFor = "cashFlow_" + (periodCount – 1);
var input = document.createElement("input");
input.type = "number";
input.id = "cashFlow_" + (periodCount – 1);
input.placeholder = "e.g., " + (20000 + (periodCount – 1) * 10000); // Dynamic placeholder example
newDiv.appendChild(label);
newDiv.appendChild(input);
container.appendChild(newDiv);
}
function calculateIRR() {
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
if (isNaN(initialInvestment)) {
document.getElementById("result").innerHTML = "Please enter a valid initial investment cost.";
return;
}
var cashFlows = [];
for (var i = 0; i < periodCount; i++) {
var cfValue = parseFloat(document.getElementById("cashFlow_" + i).value);
if (isNaN(cfValue)) {
document.getElementById("result").innerHTML = "Please enter valid cash flows for all periods.";
return;
}
cashFlows.push(cfValue);
}
var allCashFlows = [-initialInvestment, …cashFlows];
// IRR Calculation using a simplified iterative approach (approximation)
// A more robust method would involve binary search or numerical methods
// Excel's XIRR or IRR functions use more sophisticated algorithms.
// This is a basic implementation for demonstration.
var irr = guessIRR();
var maxIterations = 1000;
var tolerance = 0.00001; // Precision
for (var iter = 0; iter < maxIterations; iter++) {
var npv = calculateNPV(irr, allCashFlows);
if (Math.abs(npv) < tolerance) {
break; // Found a close enough IRR
}
// Use Newton-Raphson method approximation for the derivative of NPV
var derivativeNPV = calculateDerivativeNPV(irr, allCashFlows);
if (derivativeNPV === 0) {
// Derivative is zero, cannot proceed with Newton-Raphson
irr = guessIRR(); // Reset guess and try again or report failure
break;
}
irr = irr – npv / derivativeNPV;
if (iter === maxIterations – 1) {
document.getElementById("result").innerHTML = "IRR calculation did not converge within " + maxIterations + " iterations. Consider trying different cash flows or an initial guess.";
return;
}
}
var formattedIRR = (irr * 100).toFixed(2);
document.getElementById("result").innerHTML = "The approximate Internal Rate of Return (IRR) is:
" + formattedIRR + "%";
}
// Helper function to calculate NPV for a given rate
function calculateNPV(rate, cashFlows) {
var npv = 0;
for (var i = 0; i < cashFlows.length; i++) {
npv += cashFlows[i] / Math.pow(1 + rate, i);
}
return npv;
}
// Helper function to calculate the derivative of NPV with respect to rate
function calculateDerivativeNPV(rate, cashFlows) {
var derivative = 0;
for (var i = 1; i < cashFlows.length; i++) { // Starts from i=1 because derivative of CF0/(1+r)^0 is 0
derivative -= i * cashFlows[i] / Math.pow(1 + rate, i + 1);
}
return derivative;
}
// Initial guess for IRR (e.g., 10%)
function guessIRR() {
// A simple initial guess can be the average return per period if cash flows are somewhat consistent.
// Or a fixed value like 0.1 (10%). More sophisticated methods exist.
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
var totalCashFlow = 0;
for (var i = 0; i 0 && periodCount > 0) {
var averageAnnualReturn = (totalCashFlow – initialInvestment) / initialInvestment;
var simpleIRRGuess = averageAnnualReturn / periodCount;
if (simpleIRRGuess > -1 && simpleIRRGuess < 10) { // Keep guess within reasonable bounds
return Math.max(0.01, simpleIRRGuess); // Ensure guess is not negative or too small
}
}
return 0.1; // Default guess of 10%
}