How to Calculate IRR When There is a Single Cash Inflow

This video shows how to calculate the IRR (internal rate of return) of a project by hand when there is just a single cash inflow.

When a investment opportunity consists of a single cash inflow, you can directly calculate the IRR using the following formula:

0 = -Cash Outflow + [Cash Inflow/((1+r)^n)]

where "n" is the number of periods into the future when the cash inflow occurs (the cash outflow is assumed to occur today).

After plugging in the cash outflow, cash inflow, and "n" you will be able to solve for "r" which is the rate of return that would make the NPV equal to zero. Next, multiply the value you obtain for "r" by 100 to convert to a percentage. This percentage is your IRR (internal rate of return) for the project.

At the end of the video, I also show you how to calculate IRR in Excel using the "IRR" function.

0:00 Introduction
0:23 Formula for IRR
0:40 Example of calculating IRR
1:53 Algebra for calculating IRR
3:04 Convert to a percentage
3:37 Calculate IRR in Excel

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