IRR Calculator Australia — FY 2024-25
Calculate the Internal Rate of Return on any investment. For Australia. Uses current FY 2024-25 data.
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Common questions — Australia
What is IRR and how is it calculated?
IRR is the discount rate at which the net present value of all cash flows (initial investment + all future returns) equals zero. It's solved iteratively — there's no simple formula. The Newton-Raphson method converges quickly to the answer.
Should I accept an investment if IRR > cost of capital?
Yes, generally. If IRR (24%) > cost of capital (14%), the investment earns more than it costs to fund. However, be cautious: (1) Higher IRR with lower NPV may mean smaller absolute value creation. (2) IRR assumes reinvestment at the same IRR rate — not always realistic.
What are IRR benchmarks by investment type?
Private equity targets: 20–30% IRR. Venture capital: 30–40%+ target. Infrastructure projects: 12–18%. Real estate development in India: 18–25%. Listed equity expectation: 12–15% long-term. Bank loan rate (hurdle for debt-financed): 10–14%.
What is MIRR and why is it sometimes better?
MIRR (Modified IRR) fixes IRR's reinvestment rate assumption. Instead of assuming interim cash flows reinvest at the IRR, MIRR uses a more realistic reinvestment rate (usually cost of capital or risk-free rate). For projects with high interim cash flows, MIRR often gives a more realistic picture.
What if IRR can't be calculated?
If cash flows don't change sign exactly once (all positive after initial investment), there may be multiple IRR solutions or no real solution. This calculator handles standard cases (negative outflow, positive inflows). For non-conventional cash flows, rely on NPV instead.