This calculator helps you determine the Internal Rate of Return (IRR) for a series of cash flows, commonly used when evaluating investments like annuities. The IRR is the discount rate at which the net present value (NPV) of all cash flows from a particular project or investment equals zero.
function calculateAnnuityIRR() {
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
var cashFlowsInput = document.getElementById("cashFlows").value;
var maxIterations = parseInt(document.getElementById("iterations").value);
var resultDiv = document.getElementById("irrResult");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(initialInvestment) || isNaN(maxIterations) || cashFlowsInput.trim() === "") {
resultDiv.innerHTML = "Please enter valid numbers for all fields and at least one cash flow.";
return;
}
var cashFlowsArray = cashFlowsInput.split(',').map(function(item) {
return parseFloat(item.trim());
});
if (cashFlowsArray.some(isNaN)) {
resultDiv.innerHTML = "Please ensure all cash flows are valid numbers.";
return;
}
// Combine initial investment (as a negative cash flow) with subsequent cash flows
var allCashFlows = [-initialInvestment].concat(cashFlowsArray);
// Use a numerical method (like Newton-Raphson) to find IRR
// This is a simplified implementation. For highly precise results or complex scenarios,
// a more robust library might be needed.
function calculateNPV(rate, flows) {
var npv = 0;
for (var i = 0; i < flows.length; i++) {
npv += flows[i] / Math.pow(1 + rate, i);
}
return npv;
}
function findIRR(flows, maxIter) {
var guess = 0.1; // Initial guess for IRR
var tolerance = 0.00001;
var rate = guess;
for (var i = 0; i < maxIter; i++) {
var npv = calculateNPV(rate, flows);
var derivative = 0;
for (var j = 1; j < flows.length; j++) {
derivative += -j * flows[j] / Math.pow(1 + rate, j + 1);
}
if (Math.abs(derivative) < tolerance) { // Avoid division by near zero
break;
}
var newRate = rate – npv / derivative;
if (Math.abs(newRate – rate) 0.1) { // A small tolerance for the final NPV check
resultDiv.innerHTML = "IRR could not be accurately determined with the given inputs and iterations. Try adjusting cash flows or increasing iterations.";
} else {
resultDiv.innerHTML = "The calculated Internal Rate of Return (IRR) is: " + (irr * 100).toFixed(2) + "%";
}
}
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font-family: sans-serif;
border: 1px solid #ccc;
padding: 20px;
border-radius: 8px;
max-width: 500px;
margin: 20px auto;
background-color: #f9f9f9;
}
#annuity-irr-calculator h2 {
text-align: center;
color: #333;
margin-bottom: 20px;
}
.input-section {
margin-bottom: 15px;
}
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display: block;
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-section input[type="number"],
.input-section input[type="text"] {
width: calc(100% – 12px);
padding: 8px;
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border-radius: 4px;
box-sizing: border-box;
}
button {
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width: 100%;
padding: 10px;
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margin-top: 10px;
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button:hover {
background-color: #45a049;
}
.result-section {
margin-top: 20px;
padding: 15px;
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background-color: #d4edda;
color: #155724;
border-radius: 4px;
text-align: center;
}