The internal rate of return (IRR) is a metric used in capital budgeting to estimate the return of potential investments. Here is the formula for calculating it.

Excel and Google Sheets have three functions to calculate the internal rate of return: IRR, XIRR, and MIRR. Learn how these functions can calculate investment returns.

If the payments are made annually, the next step is straightforward. Use the =IRR () function in your spreadsheet to calculate the interest rate of the capital lease.

Earlier, we had seen how the RATE function can be used to calculate the return on investments, whether lump-sum or periodic. This can come in handy in the calculation of SIP returns, too.