IRR to ROI Converter

IRR to ROI Conversion Table

The quick reference below shows the total ROI produced by a given annualised IRR across common holding periods.

What Is the Difference Between IRR and ROI?

ROI tells you the total percentage gain over the entire life of an investment. It is simple and intuitive, but it is blind to time: doubling your money is reported as 100% ROI whether it took one year or fifteen.

IRR fixes that by expressing the return as an annualised compound rate. It answers a different question — not “how much did I make?” but “at what yearly rate did my capital grow?” This is why investors, private equity funds and lenders quote IRR rather than ROI: it is the only figure that lets you compare a two-year deal against a seven-year one on the same footing.

The practical consequence is that the two numbers diverge sharply as the holding period lengthens. A 100% ROI is a 100% IRR over one year, roughly 26% IRR over three years, and only about 7.2% IRR over ten. Quoting ROI without the holding period attached is close to meaningless.

IRR to ROI Formula

Where n is the holding period in years. Both formulas are exact rearrangements of each other, so converting in either direction and back returns the original figure.

Worked example

You invest $100,000 in a business and sell your stake four years later for $174,901.

• Total ROI = ($174,901 − $100,000) ÷ $100,000 = 74.9%
• IRR = (1.749)^1/4 − 1 = 15.0% per year
• Multiple = 1.75x your money back

All three describe the same deal. Which one you lead with usually depends on your audience: founders and operators tend to think in multiples, lenders in IRR, and small business owners in ROI.

When This Conversion Does Not Apply

This converter assumes one cash outflow at the start and one inflow at the end. That covers most property deals, business acquisitions, equity stakes and one-off capital projects. It does not hold when:

• Capital is drawn in stages. A fund calling capital over three years has a very different IRR from one deploying it all on day one, even with identical total returns.
• There are interim distributions. Dividends, rent or partial exits received along the way raise IRR without changing total ROI.
• Cash flows change sign more than once. A project that needs further investment after producing returns can have multiple mathematically valid IRRs, or none at all.

In those cases IRR has to be solved from the actual dated cash flow schedule. Our ROI calculator handles simple multi-period cases, and our team builds full cash flow models when the schedule is genuinely irregular.

Related Calculators

• ROI Calculator — ROI, NPV, IRR and payback period in one place
• NPV Calculator — present value of a future cash flow stream
• CAGR Calculator — compound annual growth rate
• WACC Calculator — your weighted average cost of capital, the usual IRR hurdle rate
• Break-Even Calculator — the volume at which a project starts earning

Frequently Asked Questions

Is IRR always higher than ROI?

Only when the holding period is under a year. Beyond twelve months the annualised IRR is always lower than cumulative ROI, because the same total gain is being spread across more years.

Can IRR be negative?

Yes. If you exit for less than you put in, both ROI and IRR are negative. A total ROI of −30% over three years works out to an IRR of roughly −11.2% per year.

What is a good IRR for a small business investment?

It depends entirely on risk and on your cost of capital. As a rough guide, small business acquisitions are typically underwritten to 20–30% IRR, commercial property to 10–15%, and public equities have delivered around 10% long term. The only universal rule is that the IRR must exceed your weighted average cost of capital for the deal to create value.

Is MOIC the same as ROI?

They are two ways of stating the same thing. MOIC (multiple on invested capital) counts your original capital — getting $175k back on $100k is 1.75x. ROI excludes it and counts only the gain, so the same deal is 75% ROI. MOIC = 1 + ROI.