IRR Hurdle Calculator

Multi-tier waterfalls trigger splits at IRR hurdles — 12%, 15%, 18%, 20%. This calculator computes the absolute proceeds needed to hit any IRR target at a given hold period, and shows the cushion between projected and hurdle.

Equity invested

IRR hurdle

Years to hit hurdle

Projected proceeds at sale

Proceeds needed to hit hurdle

$1,762,342

MOIC at hurdle

1.76

Projected IRR at these proceeds

13.70%

Proceeds above hurdle (+ = yes)

$137,658

Hits hurdle

Yes

How the math works

IRR hurdles are the thresholds in multi-tier waterfalls — e.g., 20/80 split up to 12% IRR, then 30/70 to 18%, then 40/60 above. This calculator returns the absolute dollar proceeds needed to hit a target IRR at a given hold period.

Hurdles are checked on deal cash flows, which include interim distributions. For a single-sale deal with no interim cash, hurdle proceeds = equity × (1 + IRR)^years.

How to Use

Enter equity invested.
Enter target IRR hurdle.
Enter years to hit hurdle and projected proceeds.
Read proceeds required and cushion above hurdle.

Frequently Asked Questions

Common hurdle tiers?

Conservative core: 8% pref → 80/20 to 12% IRR → 70/30 above. Value-add: 8% pref → 80/20 to 15% IRR → 60/40 above. Development: 10% pref → 80/20 to 18% IRR → 50/50 above.

Does interim cash count toward hurdle?

Yes. IRR uses time-weighted cash flows. Interim distributions (operating cash flow, refinance proceeds) count toward the hurdle and often make hitting the IRR easier than sale proceeds alone would suggest.

IRR vs equity multiple?

IRR compounds — short hold with moderate proceeds beats long hold with high proceeds. MOIC only measures dollars out vs in. A 1.8x over 5 years (12.5% IRR) is often preferred over 2.5x over 10 years (9.6% IRR).