Discover how to calculate internal rate of return (IRR) to evaluate investment opportunities and understand their potential returns.

IRR measures the rate needed to break even on an investment. Calculate IRR by setting NPV to zero and solving for the discount rate. Use Excel's IRR function by inputting initial cost and cash inflow.

Daniel Jassy, CFA, is an Investopedia Academy instructor and the founder of SPYderCRusher Research. He contributes to Excel and Algorithmic Trading. David Kindness is a Certified Public Accountant ...