IRR Calculator · Practical guide
What Is a Good IRR for an Investment?
A good IRR is one that comfortably beats your cost of capital — here is what that means in real numbers.
At a glance
The Short Answer
A "good" IRR is any rate above your hurdle rate — the return you could earn elsewhere. For many individual investors that benchmark is 7-10% (roughly long-run stock market returns). Real estate investors often look for 12-15%, while venture capital funds target 20% or more because so many deals fail.
Interactive tool
IRR Calculator
Enter your own values, then compare the result with the examples below.
Yearly Cash Flows
Net Present Value at Various Rates
| Discount Rate | Net Present Value (NPV) |
|---|
Typical IRR Targets by Investment Type
| Investment Type | Common IRR Target |
|---|---|
| Diversified stock portfolio | 7-10% |
| Rental real estate | 8-12% |
| Private equity / buyouts | 15-20% |
| Venture capital | 20%+ |
A Worked Example
Say you invest $10,000 and receive $3,000 per year for 5 years. Entering an initial investment of -10,000 with five yearly cash flows of 3,000 gives an IRR of about 15.2%. If your alternative is a stock index fund returning around 8%, this project clears the bar by a wide margin. If your funding costs 18% (say, borrowed money), the same project destroys value.
Use the NPV Table to See the Margin
The calculator also shows net present value at discount rates from 0% to 20%. For the example above, NPV is +$2,988 at 5%, +$56 at 15%, and -$1,028 at 20%. The rate where NPV crosses zero — 15.2% — is the IRR. The further your required return sits below that crossing point, the safer the deal.
Why the Hurdle Rate Matters More Than the Number
An IRR of 12% is excellent if your money costs 5% and mediocre if it costs 11%. Always compare the IRR against what the capital costs you or what you could reliably earn elsewhere — never against zero.
Frequently Asked Questions
Is a 10% IRR good?
It depends on your benchmark. For an investor whose alternative is a 7-8% index fund, 10% is solid. For a venture fund targeting 20%, the same 10% would be a pass.
Is a higher IRR always better?
All else equal, yes — but a small project with a 40% IRR can create less wealth than a large one at 18%. IRR ignores the dollar size of the investment, which is why professionals check NPV too.
Can IRR be over 100%?
Yes, when cash flows are large relative to the initial outlay. Note this calculator searches for IRR between -99% and 100%, so extreme rates beyond that range may not be found.
What does a negative IRR mean?
A negative IRR means the cash flows do not repay the initial investment — the project loses money overall. That is generally a reason to reject it.